U.S. retail sales growth in March once again exceeded expectations, and last month's value was revised sharply, further weakening expectations for an interest rate cut.

On Monday, April 15, the U.S. Census Bureau released March retail sales data. Data showed that U.S. retail sales increased by 0.7% month-on-month in March. The previous value was revised from 0.6% to 0.9%, which also exceeded market expectations of 0.4%.

Retail sales exceeded expectations across the board. Specifically:

Retail sales increased by 0.7% month-on-month, compared with expectations of 0.4% and the previous value of 0.9%;

Retail sales excluding automobiles increased by 1.1% month-on-month, compared with expectations of 0.5% and the previous value of 0.3%;

Retail sales excluding automobiles and natural gas increased by 1% month-on-month, compared with expectations of 0.3% and the previous value of 0.5%;

Core retail sales (excluding automobiles, gasoline, building materials and food services) increased by 1.1% month-on-month, compared with expectations of 0.4%, the largest increase since February 2023.

But "real" retail sales (not seasonally adjusted), adjusted (roughly) for inflation, fell in 12 of the past 17 months.

After the release of retail sales data, the U.S. dollar index rose by about 20 points in the short term and is now at 106.15; USD/JPY rose above 154. U.S. stock futures fell slightly in the short term, and multi-maturity U.S. bond yields hit a new high for the year. Spot gold has little short-term fluctuations and is currently trading at $2,355.43 per ounce.

Gasoline sales rise, e-commerce grows the most

Among the 13 key categories released, the sales of 9 categories increased compared with a month ago.

Among them, gasoline and e-commerce have the largest growth rates. Spending at the pump increased as gasoline prices increased this month.

Motor vehicles and parts fell the most after soaring last month, while sales of department stores and electronic appliances also fell sharply last month.

Is the interest rate cut too far away?

Consumer spending accounts for about two-thirds of the U.S. economy and is known as the "strongest pillar" of the U.S. economy. The report shows that consumer spending remains resilient. As long as a strong labor market supports household demand, inflation is likely to become entrenched in the economy and further delay rate cuts by the Federal Reserve.

Stronger-than-expected retail sales data in March further weakened investor confidence in the Federal Reserve starting to cut interest rates this year. Market expectations for monetary policy have shifted to the Federal Reserve starting to cut interest rates later, and traders no longer believe that interest rates will be cut 100% before November.

In addition, New York Fed President Williams, who has permanent voting rights on the FOMC and is known as the "third in command of the Federal Reserve" that night, said that if inflation continues to gradually decline, the Federal Reserve may start to lower interest rates this year. He said monetary policy is in good shape and consumers and the overall economy continue to be strong:

We need to start a process at some point to get rates back to more normal levels, and my personal view is that that process could start this year.

Fed officials forecast just three rate cuts in forecasts released last month. Williams said last week that while the Fed has made tremendous progress in balancing its inflation and employment goals, there is no need to cut interest rates in the short term.