Tonight, is the US retail data going to be explosive?

After the Fed's rate cut "shoe drops", investors are closely watching the subsequent rate cut path. What guidance will tonight's retail sales data provide?

At 20:30 Beijing time tonight, the U.S. Census Bureau will release U.S. retail sales data for September, revealing more clues about the direction of the U.S. economy.

According to the median expectation of economists surveyed by Bloomberg, the month-on-month growth rate of U.S. retail sales in September is expected to increase from 0.1% last month to 0.3%; core retail sales (excluding automobiles) are expected to increase by 0.2% month-on-month, also higher than the previous value of 0.1%.

There are signs that September retail sales data may exceed expectations, increasing the possibility of the economy not landing.

BofA: Seasonally adjusted retail sales in September are expected to increase by 0.8% month-on-month, far exceeding market expectations

Bank of America economist Aditya Bhave expects that after seasonal adjustments, the month-on-month growth rate of retail sales in September will soar to 0.8%, and core retail sales (excluding automobiles) will increase by 0.7% month-on-month, both far exceeding market expectations.

By category, BofA expects significant growth in almost all categories of retail sales, with the largest increases likely in department stores, general merchandise stores, and clothing stores.

Bhave stated that compared to last year, this year's Labor Day in the U.S. (the first Monday of September each year) had more parts of spending not included in September, so consumer data may unexpectedly show strong growth after seasonal adjustments.

According to Bhave, the U.S. Census Bureau will choose "extreme seasonal adjustments" to offset various holiday effects, leading to a surge in September retail sales data.

Reported data shows that Bank of America's credit and debit card spending in September decreased by 0.9% month-on-month, but after seasonal adjustments, it surged by 0.6% month-on-month. This is mainly because this year's Labor Day in the U.S. was on September 2, while last year it was on September 4, leading to a decrease in spending included in September.

It is worth noting that Bank of America and the U.S. Census Bureau use the same seasonal adjustment calculation method.

From "soft landing" to "no landing"?

Based on the above analysis, Bhave warns in the report that if his prediction is correct, the annualized growth rate of actual core retail sales (core retail sales adjusted for inflation) over a 3-month period will reach 7%.

Moreover, the report also adds that with hurricanes "Helen" and "Milton" consecutively hitting the southeastern United States, including regions in Florida and Georgia, grocery expenditures may also surge, further boosting retail sales.

The report also indicates that due to tonight's data release following the "very encouraging" GDP data and September non-farm payrolls report, it is "significant":

"A month ago, the question was whether we were heading towards a recession or a soft landing. Now we believe that if retail sales accelerate significantly, people's views may further shift towards 'no landing,' or even require re-acceleration."

Regarding the Federal Reserve's future interest rate cut path, Bank of America stated that the sharp increase in retail sales data in September may not "shorten the rate-cut cycle":

"In our view, not at least for now. With the federal funds rate still close to 5%, we believe that as long as overall inflation remains downward, even if labor and economic activity data are strong, the Fed will confidently cut rates again (two to four times)."

However, some opinions suggest that if tonight's data surges as expected by Bank of America, it will lead to a surge in U.S. bond yields and the U.S. dollar, almost reducing the possibility of further rate cuts to zero