US equities were hurt by a dire holiday sales outlook from Target Corporation. Investors took the opportunity after the recentBut concerns abound that better-than-expected US retail sales last month could spur the American economy in coming months and then force the Fed to retain its aggressive rate posture in the face of cooler-than-expected inflation data over the past week.
Retail sales rose 1.3% in October, more than the 1% increase that economists polled by Reuters had forecast. Goldman Sachs said it was adding another 25-basis-point hike by the Fed to its 2023 outlook, and raised its forecast for the peak fed funds rate to 5%-5.25% – higher than the market’s current pricing of a peak target rate of 4.92%.
Yields fell further on the market’s still mostly benign inflation outlook. The yield on 10-year Treasury notes slid 10.4 basis points to 3.695%.