US retail sales pick up in June

US retail sales rose 0.6% in June, ahead of market expectations, and providing some relief amid growing concerns about consumer spending weakness. The broad-based recovery saw 10 out of 13 categories post gains, with motor vehicle sales surprisingly leading the advance despite administrative data showing actual car sales declined and vehicle prices fell. This marked a turnaround after two consecutive months of retail sales declines, offering some reassurance about consumer health at a time when Americans have remained largely pessimistic about the economy due to ongoing cost-of-living pressures and the threat of tariffs, though sentiment has shown recent signs of improvement.

US initial jobless claims fell for the fifth consecutive week to 221,000, reaching the lowest level since mid-April and significantly below economists’ expectations of 233,000. While initial claims have returned to pre-pandemic subdued levels after rising in May and June, continuing claims remained elevated at 1.96 million near their highest point since 2021, indicating that while layoffs remain limited, unemployed Americans are facing greater difficulty finding new employment as hiring has slowed across the economy.

Federal Reserve Bank of San Francisco President Mary Daly indicated that two interest rate cuts remain a reasonable expectation for this year, emphasizing the importance of not delaying monetary policy adjustments too long while waiting for inflation to reach the Fed’s 2% target. Daly noted that businesses are currently managing the impact of President Trump’s tariffs and consumer spending continues, allowing the Fed to maintain current rates as inflation trends downward. However, she cautioned that waiting until inflation reaches exactly 2% could result in unnecessary economic damage, and while acknowledging that tariffs are contributing to higher goods prices, she expressed encouragement about ongoing disinflation in services costs. Investors currently see the odds of a rate cut in September as a little better than 50-50, according to futures.

UK unemployment rose to a four year high of 4.7% in the three months through May and June payroll data showed 41,000 job losses in June, worse than economists’ expectations, reflecting the impact of the Labour government’s minimum wage increase and GBP 26bn payroll tax hike imposed in April. However, the data provided some relief as May’s job losses were significantly revised down from 109,000 to 25,000 due to reporting quirks, and pay growth excluding bonuses cooled to 5% from 5.3%, with private sector wage inflation dropping below 5% for the first time since early 2022. The broad-based labour market weakening strengthened the case for Bank of England rate cuts, with traders pricing in 50 basis points of cuts this year and putting the odds of a quarter-point reduction next month at over 80%.

Ajman’s real estate sector recorded strong performance in the first half of 2025, with the total transactions value growing 37% y/y to AED 12.4bn.

Today’s Economic Data and Events

18:00 University of Michigan consumer sentiment: Forecast 61.5

Fixed Income

US Treasuries closed flat, with the 10-year yield holding around 4.45% and the 2-year yield at 3.908.

Qatar National Bank issued USD 1bn in a five year bond at T+70. Total order books were more than USD 3bn

FX

The US dollar rose 0.25% in the DXY index to 98.635. USDJPY rose 0.46% to 148.56 while EURUSD declined by 0.36% to 1.1599. GBPUSD closed flat at 1.3418.

In emerging markets, USDTRY saw a modest gain of 0.06% to 40.2683. Indian rupee depreciated with USDINR up 0.16% to 86.0775.

Equity Markets

The US equity markets gained momentum on the back of the positive data on retail sales and the decline in jobless claims. The S&P 500 topped 6300, reaching an all-time high before closing at 6297, ending the day with a 0.54% gain. The Nasdaq increased 0.74% to 20884, and the Dow Jones rose 0.52% to 44,484.

Major European indices closed higher with the EuroStoxx rising 1.49% and the FTSE 100 gaining 0.52%.

Locally, ADX General rose for the third day, climbing 0.7% to 10,242.49 in Abu Dhabi. First Abu Dhabi Bank PJSC contributed the most to the index gain, increasing 3.5%. Commercial Bank International PJSC had the largest increase, rising 10.1%. DFMGI rose 2.15% to 6103.09. Commercial Bank of Dubai lead the rise increasing 11%.

Saudi’s Tadawul closed down 0.29%.

Commodities

Oil markets rallied on the back of the signs of tighter supplies in the near term and stronger demand signals in the US. Brent crude rose 1.52% to USD 69.56/b and the WTI gained 1.82% to USD 67.59/b.

Gold edged lower 0.23% closing at USD 3,339.35 per ounce while silver increased 0.6% to USD 38.14.