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Nick Kounis, head of financial markets research at ABN AMRO, points out that the US retail sales rebounded strongly in March, unwinding the weakness seen at the turn of the year, with overall sales surging by 1.6% mom in March, following a 0.2% decline in February.

Key Quotes

“Underlying trends look to be improving as well, with Q1 ex-autos & gas sales up by an annualised 2.7%, after being flat in Q4. Consumer fundamentals still look good. US aggregate real wages are running at rates of 3.5-4%, while consumer confidence is also at elevated levels.”

“While employment growth will slow and the impact of higher interest rates still has to fully come through, we judge that consumer spending will be relatively resilient, which should limit the slowdown in the overall economy to around trend rates.”