The US retail data for July has been released. At first glance, the month-on-month change is +0.5%, which is slightly lower than the expected 0.6%, and it seems a bit disappointing.
But the key point is that the June data was significantly revised up to 0.9%. It's like having a more stable first step, and the second step didn't falter either. For traders, this is not "dull data," but an added bonus for bullish confidence.
Data breakdown: Consumer resilience is surprisingly strong.
Core retail (excluding autos and gas prices): +0.2% → Steady rise in daily consumption supports corporate profit expectations.
Retail sales included in GDP: MoM +0.5%, YoY +10.8% → The third quarter starts with a direct "nitrogen acceleration."
Actual retail (excluding inflation): year-on-year +1.2%, has risen for 10 consecutive months → completely hedging against stagflation fears.
The only deviation is that consumer confidence remains weak. People say they have no confidence, but they are very active with their credit cards. This dissonance between sentiment and behavior is something traders should remember:
"The market does not follow emotions; money only follows data."
Trading Strategy Guide
Traditional market targets:
U.S. stock consumer sector ETFs: XLY (Consumer Discretionary), XRT (Retail), with short-term support.
Dollar Index DXY: Consumer resilience delays interest rate cut expectations, dollar is relatively strong.
U.S. Treasuries: The downside potential for long-term yields is limited, be cautious when going long on long-term government bonds (TLT, IEF).
Crypto market targets:
$BTC & $ETH: Short-term risk appetite remains stable, and a strong performance in US stocks often leads to a capital inflow into mainstream coins.
DeFi lending sector: If the US dollar is strong and interest rates are high, the demand for stablecoin lending will increase, benefiting $AAVE and $COMP.
Reverse Risk Scenario
If in the next two months:
CPI exceeds expectations on the upside (especially core inflation)
International oil prices continue to soar
The Federal Reserve has released hawkish signals ahead of schedule.
→ The US dollar will strengthen further, US bond yields will rise, and both the stock market and the cryptocurrency market will face valuation compression.
Response Strategy: Reduce positions in high Beta assets and shift towards defensive sectors (essential consumption, energy). In crypto, reduce exposure to highly volatile altcoins and move towards stablecoins or blue-chip coins.
This retail data tells us that the foundation of domestic demand in the U.S. economy is stronger than expected, making the logic of a short-term recession and stagflation difficult to establish.
For traders, following the data to make trades and not being swayed by emotional indicators is the current winning strategy.
