Strong Data Takes 50bp Cut in September Off The Table

• U.S. retail sales rose more than expected in July, which could help to allay financial market fears of a sharp economic slowdown that were fanned by a jump in the unemployment rate.
• Meanwhile, another report showing a smaller-than-expected increase in the number of Americans filing for unemployment benefits last week showed resilience rather than deterioration in labor market conditions and lifted stock futures, Treasury yields, and the dollar.
• Futures traders raised the odds to about 75% that the Federal Reserve will ease by just 25 basis points in September after the Commerce Department said retail sales increased 1.0% last month after a downwardly revised 0.2% drop in June. Economists polled by Reuters had forecast retail sales advancing 0.3% after previously being reported as unchanged.

(Source: Reuters)