On Tuesday (February 10), the latest data released by the US Census Bureau showed that sales growth was stagnant, falling short of market expectations. Combined with the increasing speculation about future rate cuts by the Federal Reserve (Fed), this led to a comprehensive decline in US bond yields and a weakening of the US dollar, subsequently boosting the prices of safe-haven assets such as gold and silver.
According to the latest data from the US Census Bureau, preliminary estimates for retail sales in the US in December last year amounted to $735 billion. Adjusted for seasonal fluctuations, holidays, and differences in trading days, it was roughly flat compared to the previous month, falling below the Dow’s expected 0.4% growth rate.
Despite a 2.4% (±0.5%) increase compared to December 2024, the monthly growth rate showed a stagnant trend, indicating that the end of the holiday shopping season did not meet expectations. Specific data indicated that while non-store retailers (primarily e-commerce) saw a 5.3% year-on-year increase and the food services industry grew by 4.7%, a decrease in spending on automobiles and other high-priced goods dragged down overall performance.
The weak retail data acted as a shot in the arm for the bond market bulls. Following the data release, US bond yields fell, with the market interpreting the economic slowdown as compelling the Fed to adopt a looser monetary policy.
The benchmark 10-year US Treasury yield fell from 4.145% to 4.133%; the more interest rate-sensitive 2-year US Treasury yield dropped from 3.458% to 3.454%. Additionally, the 30-year US Treasury yield slid from 4.787% to 4.775%. These changes provided support for the precious metal market.
Currently, the spot gold price saw a daily increase of 1.54%, breaking the $5100 level; while the spot silver price surged over 6% in a single day, reaching about $85.8, starkly contrasting the recent sharp declines.
Senior market analyst Kyle Rodda from Capital.com told Reuters, “In recent weeks, precious metals seemed somewhat disconnected from fundamentals, but with falling yields, gold and silver are regaining strong support.” Rodda added, “Following the soft retail sales data, the market may need a more rapid and substantial rate cut than previously thought.”
Todd Schoenberger, Chief Investment Officer of CrossCheck Management, told CNBC, “Even with the stock market’s rise, consumers still lack confidence. Today’s data proves that people are not only worried about their financial condition, but also that credit expansion is nearing its limit, narrowing the room for economic mistakes.”
Although Beth Hammack, President of the Federal Reserve Bank of Cleveland, expressed a “cautiously optimistic” outlook on the economic prospects to Reuters on February 10, stating that the central bank does not feel pressured to quickly adjust interest rates, market pricing seems to be reflecting an earlier path to rate cuts.
Investors are generally expecting at least two rate cuts in 2026, with the first possibly happening in June. The current market focus has shifted to key delayed data releases affected by the partial government shutdown.
The January non-farm payroll report, originally set for release last Friday (February 6), will be unveiled on Wednesday (February 11), with the highly anticipated Consumer Price Index (CPI) and weekly initial jobless claims data scheduled for Friday (February 13) and Thursday (February 12) respectively.
Analysts estimate that if inflation data further cools to 2.5%, it could further consolidate the bullish trend in the bond market and precious metals.
Moreover, economists predict that the upcoming January non-farm payroll report may show zero job growth or only slight improvement.
Mark Zandi, Chief Economist at Moody’s Analytics, told CNBC, “I expect the number to be zero, with common expectations around 50,000 jobs. Any prediction close to zero indicates a very fragile situation. Though there hasn’t been widespread layoffs yet, a wave of job cuts may be on the horizon.”