Fed Expectations Shift as Retail Sales Exceed Forecasts

The week began with bond yields facing challenges as March's Retail Sales report on Monday significantly exceeded expectations. Moreover, February's figures were revised upwards from their initial release. This strong economic performance, along with last week's inflation and payroll data, has moderated expectations for Federal Reserve easing in 2024. Current market forecasts for rate cuts this year have been adjusted down to two reductions totaling 50 basis points (bps). Many are now questioning the need for any rate cuts in 2024. Looking forward to next week, housing data is set to be released on Thursday, followed by the Personal Consumption Expenditures (PCE) report, the Fed's preferred inflation indicator, on Friday.