U.S. July retail sales fall 0.6% vs. 0.1% gain forecast; 2-year yield drops

U.S. retail and food-services sales fell 0.6% in July to $763.6B, against a Dow Jones consensus forecast for a 0.1% increase. The 0.7-percentage-point miss weakened the front end of the Treasury curve: the 2-year yield fell more than 2 basis points to 4.117%, according to CNBC market data.

The U.S. Census Bureau release put July sales 5.0% above the same month in 2025. Sales for May through July were 6.3% higher than the comparable three-month period a year earlier. June's month-over-month increase was left unrevised at 0.2%. The estimates are seasonally adjusted for trading-day and holiday differences but are not adjusted for price changes.

The market response was concentrated in shorter maturities, which track expected Federal Reserve policy more closely. The 10-year yield was less than 1 basis point higher at 4.645%, while the 30-year yield added more than 2 basis points to 5.232%. That split shows the retail-sales miss easing near-term policy pressure without removing the term-premium and supply pressures embedded in longer-dated bonds.

The headline decline also requires care. The Census Bureau reports nominal sales, so the release measures dollars spent rather than inflation-adjusted consumption. A monthly decline can reflect lower prices, changes in the timing of major promotions, or weaker unit demand. The official report gives a ±0.4-percentage-point sampling interval for the monthly change, making later revisions material to the final reading.

The next checks are the detailed category tables and subsequent personal-consumption data. Investors will compare control-group sales, services spending and inflation-adjusted consumption before changing estimates for third-quarter GDP. Treasury pricing will also remain sensitive to the next labor-market and inflation releases because the July retail surprise by itself does not establish a sustained consumption slowdown.

Not investment advice. Verify all figures with primary sources before acting.