Retailers Gear Up for Holidays and Tariff ThreatRetailersGearUpforHolidaysandTariffThreat

Major retailers in the US reported a mixed bag of quarterly earnings leading into the holiday season. Discount chains saw some of the strongest results, as shoppers favor value-focused stores after wrestling with inflation. Home-improvement retailers indicated that while spending has been resilient, Americans are delaying big purchases amid higher prices and borrowing costs. Overall, the Census Bureau said retail sales were up 0.4% in October compared with the previous month, exceeding forecasts. The National Retail Federation, a trade group, has predicted that sales during the holiday season will rise 2.5% to 3.5% year-over-year.

Retailers also said they are preparing for tariffs under the incoming Trump administration. Facing the prospect of new levies on imported goods, retailers could build up inventories in the coming months or make plans to raise prices to mitigate the impact to their businesses. Plans to impose tariffs have contributed to an uncertain outlook for retailers and the broader economy, with companies that make everything from cars to clothes outside the US potentially feeling the effects of a trade war. PGIM Fixed Income’s Weekly View from the Desk takes an early look at how tariffs may impact industries, regions, and global trade.