Tomorrow's US retail data will be relatively important. The main focus is from the consumer's perspective, to see if inflation in the service sector has been effectively alleviated.
From today's released PPI data, the PPI for the service sector saw a negative growth on a month-over-month basis. However, the main factor was due to a 7.7% drop in the index for fuel and lubricant retail.
If we exclude trade, transportation, and warehousing, the demand services index increased by 0.2%.
This aligns with the information provided by last week's CPI release: core goods inflation has indeed eased, but there are differing views on core services. Excluding rent, transportation services (which experience high volatility), and the healthcare sector (subject to algorithm adjustments), prices for other types of services continued to rise in October.
In this context, tomorrow's retail data becomes particularly significant, with the key focus being on consumer spending in the service sector.
Based on the current state of the US dining and tourism industries, consumption remains very strong, the labor market (wage pressure) is still tight, and American households still hold over a trillion dollars in excess savings, which could support US retail data.
The market-expected recession won't come so soon; as Waller put it, 'We've still got a ways to go.'
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