Retail Sales 18% Above Pre-Covid Trend, Disincentives Pile Up for Homebuyers, and a Check In on Commodities
June 16, 2021 | FIRESIDE CHARTS
Retail sales may have fallen short of estimates and slipped 1.3% in May, but they remain a solid 18% above their pre-Covid trend and continue to reflect strength from the U.S. consumer. What’s more, after a year at home with little to do but spend on things, could easing retail sales indicate consumers are once again ready to spend on experiences and inject a little life back into the services sector? We may soon see a pivot away from spending on home purchases at least as inventories remain tight and prices are continuing to soar after climbing over 20% year-over-year, finally starting to disincentivize buyers. And while many economists don’t expect any significant signals from the Fed on asset purchase tapering until August’s Jackson Hole symposium at the earliest, we’re looking at treasury supply and demand and reflecting on the potential impact. Finally, as the rally in commodities begins to fade, is “Dr. Copper” going off shift?
1. Between the pandemic stimulus and the steady economic recovery, the U.S. consumer (~70% of the economy) is spending away:
Source: Oxford Analytics, from 6/16/21
2. Despite some relief in supply bottlenecks and commodity price moderation, PPI remains strong:
Source: The Daily Shot, from 6/16/21
3. Home prices continue to surge and buying conditions are the worst in decades. None of this 24% is captured by the CPI measure (only equivalent rents)…
Source: Redfin Analytics, from 6/15/21
4. However, those most intent on moving have already done so. The “end” of the pandemic has also reduced excess demand significantly, especially for vacation homes:
Source: Redfin Analytics, from 6/15/21
5. It took about 10 years for Americans to “re-discover” their home equity lines. It is great while home prices are going up, but extrapolating the trend is, as we learned in 2007-08, a fool’s errand:
Source: The Daily Shot, from 6/15/21
6. A good summary of the recent demand for treasuries. Who will replace the light blue when the Fed tapers?
Source: The Daily Shot, from 6/16/21
7. Junk bond coupons and spreads over treasuries are at record lows:
Source: Bloomberg, from 6/15/21
8. A great look at the overall composition of our debt markets:
Source: The Daily Shot, from 6/15/21
9. After lumber prices tumbled to earth, we wonder if “Dr. Copper” is consolidating or starting a retreat?
Source: Bloomberg, from 6/14/21
10. Remember the European Financial Crisis and talk of Grexit?
Source: The Daily Shot, from 6/16/21
11. For all of us who are not veterans:
Source: The Daily Shot, from 6/15/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.