Any trade deal the United States makes with China must be on US terms, Donald Trump said on Thursday (Aug 15), as Beijing prepared to take countermeasures in response to the Republican US president’s latest tariffs on US$300 billion (S$416.7 billion) of Chinese imports.
“China, frankly, would love to make a deal, and it’s got to be a deal on proper terms. It’s got to be a deal, frankly, on our terms. Otherwise, what’s the purpose?” Trump said in an interview on New Hampshire radio station WGIR
Moreover, the US retail sales surged in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, which could help to assuage financial markets’ fears that the economy was heading into recession. The upbeat report from the Commerce Department on Thursday, however, will likely not change expectations that the Federal Reserve will cut interest rates again next month as the outlook for the economy continues to darken against the backdrop of trade tensions and slowing growth overseas.
A key part of the US Treasury yield curve inverted on Wednesday for the first time since June 2007, triggering a stock market sell-off. An inverted Treasury yield curve is historically a reliable predictor of looming recessions.
Financial markets have fully priced in a 25-basis-point rate cut at the US central bank’s Sept. 17-18 policy meeting. The Fed lowered its short-term interest rate by a quarter point last month, citing the acrimonious US-China trade war and slowing global economies. But the data could see markets dialling back expectations of a 50-basis-point rate cut next month.
Retail sales increased 0.7 per cent last month after gaining 0.3 per cent in June, the government said. Economists polled by Reuters had forecast retail sales would rise 0.3 per cent in July.
Compared to July last year, retail sales increased 3.4 per cent.
Excluding automobiles, gasoline, building materials and food services, retail sales jumped 1.0 per cent last month after advancing by an unrevised 0.7 per cent in June. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
US stock index futures extended gains after the release of the data. US Treasury yields rose while the dollar was slightly weaker against a basket of currencies.
July’s gain in core retail sales suggested strong consumer spending early in the third quarter, though the pace will likely slow from the April-June quarter’s robust 4.3 per cent annualised rate.
Consumer spending, which accounts for more than two-thirds of the economy, is being underpinned by the lowest unemployment rate in nearly half a century.
While a separate report from the Labor Department on Thursday showed an increase in the number of Americans filing applications for unemployment benefits last week, the trend in claims continued to point to a strong labour market.
Solid consumer spending is blunting some of the hit on the economy from a downturn in manufacturing, which is underscored by weak business investment.
Manufacturing’s struggles were highlighted by a third report from the Labor Department showing productivity in the sector tumbled at its fastest pace in nearly two years in the second quarter, with factories cutting hours for workers.
The economy grew at a 2.1 per cent rate in the second quarter, decelerating from the first quarter’s 3.1 per cent pace. Growth estimates for the third quarter are below a 2.0 per cent rate.
In July, auto sales fell 0.6 per cent after rising 0.3 per cent in June.
Receipts at service stations rebounded 1.8 per cent, reflecting higher gasoline prices. Sales at building material stores gained 0.2 per cent.
Receipts at clothing stores increased 0.8 per cent. Online and mail-order retail sales jumped 2.8 per cent, the most in six months, after rising 1.9 per cent in June. They were likely boosted by Amazon.com Inc’s Prime Day.
Receipts at furniture stores rose 0.3 per cent. Sales at restaurants and bars accelerated 1.1 per cent. But spending at hobby, musical instrument and book stores dropped 1.1 per cent last month