Market Brief: UK retail sales downbeat

The British Retail Consortium’s (BRC) retail sales monitor delivered a downbeat picture of UK retail spending in October. On a like-for-like basis sales were down 1.0% y/y, whilst the consensus had been for +0.8% y/y. On a total sales basis, sales were up 0.2% y/y. This was the lowest growth rate since May. The picture was one in which non-food sales were particularly soft, continuing the recent trend in which non-food sales have been weak and food sales have held up better, providing a further pointer to squeezed households focusing on essential spending.
We heard from the Fed’s Dudley yesterday post his resignation announcement, saying “…there’s not a lot of discord going into this (Fed) transition…so I think it’s going to be a very, very smooth transition” and that the Fed vacancy situation “has no implication whatsoever for policy right now”. Further, he added that Governor Powell and Chair Yellen “are very well aligned, so I think this is going to be very evolutionary”. In Europe we heard from ECB’s Praet who sounded a bit dovish, noting that “a substantial amount of monetary accommodation continues to be necessary…” and that “overall, inflation developments, despite the solid growth, have remained subdued”.
In other news, U.S. President Donald Trump departs Tokyo Tuesday morning for a two-day visit to South Korea, bringing him near North Korean leader Kim Jong-un on a stop that will also feature talks on trade. Watch out for any headlines around this. 

The day ahead

Looking at today’s calendar, there is very little to report on. We have Eurozone retail sales for September. The ECB is due to hold a forum on Banking Supervision which will include a speech from President Draghi. The Fed’s Quarles is also due to speak in the evening at the Clearing House annual conference.

Thought of the day

It’s beginning to look a lot like Christmas and that means one thing … the return of Christmas sandwiches! The market for these lunchtime treats has grown over the years and with the various retailers getting more and more creative, you can enjoy anything from a traditional turkey and cranberry number to a vegan offering with carrots, onions, pecans and much more. With so much variety on the table it’s hard to know where to put your money – it can be the same in the currency markets! So if all this talk of the festive season has come a bit too early and you would rather focus on what the recent rate rise means for the pound or where we may be headed, the Investec dealing desk will be happy to help!