Shoppers pulled back, but stocks hit a record anyway

Good morning. The headline from Friday in the US was July retail sales, which fell 0.6% from the month before. That is the first drop in 14 months, and economists had expected a small gain, so it landed as a surprise. The University of Michigan consumer sentiment survey also slipped for the first time in three months.

Before reading too much into it, there are some mitigating factors. Amazon moved its Prime Day sale from July to June, which hollowed out July sales, and cheaper gasoline cut receipts at the pump. Meanwhile, this week's inflation data came in about as expected, easing worries about a September rate hike. Markets now see roughly a 70% chance the Fed simply holds.

Stocks liked all of that. The S&P 500 closed at a record and finished its third straight weekly gain. Bonds told a different story: a 30-year Treasury auction cleared at the highest yield since 2001, with US debt closing in on 40 trillion dollars. Stocks are saying all is well while bonds are quietly worried, and how long that standoff lasts is the question for the fall.

Oil is still the wild card. Washington promised to tighten the economic squeeze on Iran, and traders now expect the Strait of Hormuz to stay shut for weeks. Brent hovered near 88 dollars a barrel.