Market Review: December 17, 2024

Economic data from December 17 reflects diverging trends in consumer and industrial activity. Retail sales exceeded expectations, signaling resilient consumer spending, while industrial production declined, highlighting continued weakness in manufacturing. The Atlanta Fed’s GDPNow estimate for Q4 growth was revised slightly lower to 3.10%, tempering optimism. Crude oil inventories saw a sharp drawdown, signaling tightening supply, which could support energy markets.

Key Highlights:

• Retail Sales and Consumer Activity:
• Retail sales (MoM) rose by 0.70%, beating expectations and reflecting strong consumer demand.
• Core Retail Sales (MoM) grew by 0.20%, slightly below forecasts but still indicating steady underlying consumer activity.



• Industrial Production:
• Industrial production (MoM) declined by -0.10%, missing expectations, while year-over-year output fell by -0.90%, highlighting ongoing challenges in the industrial sector.

• GDPNow Estimate (Q4):
• The GDPNow estimate for Q4 growth was revised down to 3.10%, signaling slightly weaker economic expectations.

• Crude Oil Inventories:
• Crude oil inventories fell by -4.700M barrels, signaling significant supply tightening in energy markets.

Impact Analysis:

• USD Impact:
  Strong retail sales and a sharp crude inventory drawdown support USD, but weaker industrial production and a downward GDP revision temper the bullish sentiment. The overall USD impact is neutral to slightly bullish.

• Gold Impact:
  Gold benefits from weaker industrial production and lower GDP expectations, but faces bearish pressure from strong retail sales and tightening crude inventories, which suggest economic resilience. The overall gold outlook is neutral.

• Equities Futures Impact:
  Equities futures are likely to react positively to strong retail sales and tighter crude supplies, which support growth sectors. However, industrial sector weakness and lower GDP expectations may weigh on sentiment. The overall equities outlook is neutral to slightly bullish.

Today’s data underscores the resilience of U.S. consumer activity despite ongoing challenges in the industrial sector. Markets are likely to focus on the implications for Fed policy as growth expectations temper slightly while energy markets tighten.