BofA Strategists Flag 0.5% April Spending Drop as Fed Sees Japan Offload $25B US Debt
Bank of America strategists flagged an unexpected 0.5% drop in US consumer spending in April and uncertainty over its drivers. Fed data show Japan cut US Treasury holdings by $25 billion in March and US equities and gold each near a 10-day double-digit gain streak.
1. Consumer Spending Slump
Bank of America strategists observed a 0.5% decline in US consumer spending in April, with credit and debit card transaction volumes down 4% month over month. They noted no clear catalysts behind the pullback, warning that extended weakness could drag on economic growth.
2. Fed Data on Treasury Sales
Federal Reserve figures reveal Japan reduced its US Treasury holdings by $25 billion in March as part of currency intervention measures to support the yen. The reduction has coincided with a moderate rise in Treasury yields, tightening financial conditions.
3. Market Reaction
The combination of consumer spending weakness and Treasury supply shifts has fueled strong asset moves, with both US equity benchmarks and gold approaching a rare 10-day winning streak, each registering double-digit gains over the period.