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There are so many conflicting signals on this war at the moment. It’s impossible to make sense of where it really stands.

This article was written by Adam Button at www.forexlive.com.

Today’s US retail sales report was mostly positive news. The control group was the lone exception but that was on softer grocery store spending while economically-sensitive spots showed some real strength, like food services and drinking places up 0.8%.

The CFO of the world’s biggest retailer had this to say on the call today:

• February was softer than expected, March was back to normal and April was very strong

Within the report there were some signs of consumers stretching dollars toward essentials and value. Comp sales rose 4.5% though with transactions up 1.6%. Again, much of that was in groceries and essentials as general merchandise slipped slightly but it’s not a big red flag. Some could be higher end consumers trading down but you really have to squint to see a soft consumer.

Internationally, they also saw steady but slower spending in Mexico and Canada.

Another sign came from Comcast today, which owns theme parks in the US and around the world. At a conference, the company CFO said there has been no sign of impact from economic uncertainty.

Shares of WMT are down 2.3% pre-market.

This article was written by Adam Button at www.forexlive.com.

• Prior was -0.3%
• Manufacturing output -0.4% vs -0.2% prior
• Prior output +0.3% (revised to +0.4%)

There is some major uncertainty on the industrial side of the economy right now. I’m not sure this offers any clarity.

This article was written by Adam Button at www.forexlive.com.

Oil prices sank today after a report said Iran is ready to sign a nuclear deal if all economic sanctions are lifted. Trump added to that by saying Iran had agreed to terms and that “we’re getting close to doing a deal with Iran.”

This pushes back on that a bit but there is some serious smoke around a deal. Oil prices have come about $1 off the bottom but that was before this headline.

This article was written by Adam Button at www.forexlive.com.

• Prior month was -26.4

Details:

• New Orders 7.5 vs -34.2 last month
• Shipments -13.0 versus -9.1 last month
• Unfilled orders 4.9 versus -1.1 last month
• Delivery time -9.2 versus -2.6 last month
• Inventories 9.7 versus -0.9 last month
• Prices paid 59.8 versus 51.0 last month
• Prices received 43.6 versus 30.7 last month
• Number of employees 16.5 versus 0.2 last month
• Average workweek 2.0 versus -12.7 last month

This is a strong bounce back as trade uncertainty abated and positive expectations increased. I would expect even more improvement in the next months.

The 6-months forward index jumped from 6.9 to 47.2 and the new orders one from 6.6 to 49.7. This just shows that we could really get a covid-like bullwhip scenario where we see a surge in demand and economic activity after the April’s rout.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior was +2.7%
• PPI -0.5% m/m vs +0.2% expected
• Ex food and energy +3.1% y/y vs +3.1% expected
• Ex food and energy -0.4% m/m vs +0.3% expected
• Ex food, energy and trade +2.9% vs +3.4% prior
• Ex food, energy and trade -0.1% vs +0.1% prior

Before today’s data slate, the market was pricing in 74 bps in Fed easing in the year ahead and we now see about 76 bps.

This is good news on inflation pressures.

This article was written by Adam Button at www.forexlive.com.

• Prior was +1.5%

Details:

• Ex-autos +0.1% vs +0.3% expected
• Prior ex autos +0.6%
• Ex autos and gas +0.2% vs +0.9% prior
• Control group -0.2% vs +0.3% expected
• Prior control +0.4% (revised to +0.5%)
• Retail sales y/y vs +4.91% prior

The control group is the key metric in this report and it was a disappointment. I wouldn’t read too much into it though as it came after a strong month.

Some notable parts of the report

• Food services and drinking places +0.8% (there is high consumer sensitivity here)
• Clothing +0.9% (tariff front running?)
• Building materials and garden +0.9% (good sign on housing)
• Furniture and home furnishings +1.4% (again, good for housing)
• Motor vehicles +0.9% (tariff frontrunning?)
• Grocery stores +0.1%

The only real weakness here is in grocery stores so overall I’d say this report is a strong endorsement of the health of the consumer even after the tariff war kicked off. Some of that could be tariff front-running so we’ll see if it holds up but it’s a good start.

This article was written by Adam Button at www.forexlive.com.

• Prior was +0.3%
• Manufacturing sales M/M -1.4% vs -1.9% expected
• Prior was +0.2%

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior week 228K
• Initial jobless claims xxM vs 229K estimate
• 4-week moving average initial jobless claims
• Continuing claims x.xxxM vs 1.890M estimate
• Prior week continuing claims 1.879M
• 4-week MA continuing claims

This article was written by Greg Michalowski at www.forexlive.com.

• Prior month -8.10
• For the full report CLICK HERE
• May Empire manufacturing index -9.2 vs -10.0 estimate
• New orders 7.0 versus -8.8 last month
• Prices paid 59.0 versus 50.8 last month.
• Prices received 22.9 versus 28.7 last month.
• Shipments 3.5 versus -2.9 last month
• Employment -5.1 versus -2.6 last month.
• Average work week -3.4 versus -9.1 last month.
• Unfilled orders 4.8 versus 4.1 last month.
• Delivery time 1.0 versus 0.0 last month.
• Inventories 4.8 versus 7.4 last month.

Six month forward business conditions:

• General business conditions -2.0 versus -7.4 last month
• new orders -2.7 versus -6.6 last month.
• Number of employees 11.6 versus 3.4 last month
• average work week -4.8 versus -4.1 last month
• Shipments -3.4 versus -4.8 last month.
• Unfilled orders -9.5 versus -7.4 last month.
• Delivery time -3.8 versus +1.6 last month
• Inventories 1.9 versus -15.6 last month.
• Prices paid 66.7 versus 65.6 last month.
• Prices received 35.2 versus 45.9 last month.
• Capital expenditures -6.7 versus 1.6 last month
• Supply availability -27.6 versus -18.0 last month

This article was written by Greg Michalowski at www.forexlive.com.

The report notes that although the US is considering to revise the agreement, the Japanese camp is not anticipating such a change. As such, there is a possibility that negotiations will meet a deadlock. The revision to the agreement seems to be centered around the possibility of the US requesting further concessions on agriculture and livestock products, according to the sources. And that is something that Japan has refused to budge from the initial discussions.

For now, we’ll just have to wait and see. But at least there’s a possible timeline to look out for. Japan’s top trade negotiator, Ryosei Akazawa, could be travelling to Washington as soon as next week for a third round of trade talks.

This article was written by Justin Low at www.forexlive.com.

The takeaway from the earnings call today comes from these remarks by Doug McMillon. He warned that Walmart is planning to raise prices on some items as Trump’s tariffs are weighing on the firm’s costing. And that these price hikes will begin later this month, despite the recent temporary reprieve between the US and China.

“We will do our best to keep our prices as low as possible but given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins.”

If even Walmart has to be one to raise prices, you can surely expect smaller firms to also do so. That especially as it is going to be a messy logistical summer in sorting out supply chains. From before: Tariffs policy can change overnight but supply chains cannot

Adding to McMillon’s remarks, Walmart finance chief, John David Rainey, also said that:

“I’m concerned that consumer is going to start seeing higher prices. You’ll begin to see that, likely towards the tail end of this month, and then certainly much more in June.”

We’ll see how this all plays out in the months ahead. But if you’re in the Fed’s position, it continues to reaffirm that the wait-and-see approach remains the most prudent stance at the moment.

This article was written by Justin Low at www.forexlive.com.