Key facts
- US retail sales declined for the first time in nine months.
- Federal Reserve rate hike expectations for September have been tempered.
- Japan's 10-year government bond yields reached a three-decade high.
- Markets anticipate potential Bank of Japan rate hikes.
- Fears of renewed food inflation persist due to El Niño, energy costs, and supply disruptions.
US retail sales experienced their first decline in nine months in July, a trend that may lead the Federal Reserve to hold interest rates steady. This weakening consumer spending, coupled with subdued inflation reports, has reduced expectations for a September rate hike. However, rising oil prices due to the Iran conflict could alter this outlook. In Japan, 10-year government borrowing rates have surged to a three-decade high, despite slower-than-expected GDP growth, increasing pressure on the Bank of Japan to consider rate hikes. The yen strengthened against a broadly weaker dollar. Meanwhile, China's economy shows signs of losing momentum, with slowing industrial output and retail sales, and a continued slump in the property sector, prompting calls for increased stimulus. Fears of renewed food inflation, driven by El Niño, energy costs, and supply disruptions, add complexity for global central banks.