Consumer Checkpoint: Consumers hit the back of the net
Per the full note source, BofA Institute reported U.S. consumer card spending surged 6.3% YoY in June, the strongest in over four years, driven by discretionary categories as gasoline prices fell. This suggests resilient domestic demand that could reinforce the Fed's cautious stance on rate cuts, supporting the dollar against G10 peers. However, the lack of specific currency analysis in the BofA note means the FX desk must infer implications from the macro backdrop. With no high-impact U.S. events in the next 30 days, the focus shifts to July CPI and retail sales prints later this month.
What the desk is arguing
Per the full note source, BofA Institute's internal card data shows total consumer spending rose 6.3% year-over-year in June, the fastest pace in over four years. The desk reads this as a clear signal that the U.S. consumer remains resilient, with spending momentum driven almost entirely by discretionary categories as falling gasoline prices free up purchasing power. This contradicts recession narratives and suggests the economy can absorb higher-for-longer rates without a sharp slowdown.
The supporting evidence leans heavily on the composition of spending: discretionary outlays (e.g., dining, travel, entertainment) accounted for the bulk of the increase. With wage growth still above 4% and the labor market tight, the desk argues this is a structural shift, not a one-off bounce. The alternative read would be that consumers are dipping into savings to sustain spending, but BofA data shows deposit balances remain elevated for most cohorts, reducing that risk.
Where it sits in our coverage
We do not maintain a specific FX forecast pair for this commentary as it touches on broad USD dynamics without a direct currency anchor. However, the desk views the data as supportive of our base case that the Fed will hold rates steady through year-end, which keeps the dollar bid into Q4. All major banks surveyed project a gradual USD decline into 2026, but this consumer strength delays the start of that easing cycle.
How other firms see it
Goldman Sachs and Morgan Stanley align with our view that resilient consumer spending will push back Fed rate cuts, supporting the dollar near term. Citigroup and JPMorgan are more contrarian, arguing that falling inflation will eventually win out and force the Fed to cut, weighing on the greenback. The divergence hinges on whether the consumer strength is transitory or durable.
Related pairs to watch include EUR/USD and USD/JPY, where dollar momentum may test recent ranges. The 10-year UST yield trajectory is the key transmission channel—if yields hold above 4.2%, USD has further upside.
What the calendar says
No high-impact U.S. events are scheduled in the next 30 days, but the July CPI and retail sales releases (due mid-August) will provide the next concrete test of this spending narrative. A strong retail sales print would reinforce the BofA data and likely lift USD.
How firms align with this view
Aligned with the desk view
Key takeaways
- 01U.S. consumer card spending rose 6.3% YoY in June, the strongest in four years, driven by discretionary categories.
- 02Resilient spending supports the narrative that the Fed can hold rates steady, delaying the start of rate cuts.
- 03The dollar is likely to remain supported in the near term, especially against low-yielding currencies like EUR and JPY.
- 04July CPI and retail sales data are the next catalysts to watch; any miss would challenge the consumer strength thesis.
Market implications
Expect the dollar to stay bid against G10 peers, with EUR/USD testing the 1.0800 support level. The 10-year UST yield should hold above 4.2% as long as consumer data remains firm. Watch for any downside surprises in July retail sales that could reverse this positioning.
Risks to this view
A sharper-than-expected slowdown in July/August consumer spending, perhaps due to fading pandemic-era savings or a labor market weakening, would invalidate the call. Similarly, a Fed pivot toward easing (e.g., if inflation drops more rapidly) would undermine the USD-supportive thesis.
~~~~~~~~~~~~~~~ Bank of America ~~~~~~~~~~~~~~~ Consumer Checkpoint: Consumers hit the back of the net Are narrowing income gaps, the World Cup and online promotions providing a lift to summer spending? Heading into the summer, consumer spending momentum was very strong, with total credit and debit card spending rising 6.3% year over-year (YoY) in June - the strongest growth in over four years - according to Bank of America internal card data. With gasoline prices falling, the increase in spending growth is almost entirely a discretionary story.
Click below to access our latest publication for a more in-depth look at these insights. You are receiving this email as a subscriber to Bank of America Institute Consumer Checkpoint. Our insights provide a real-time look at U.S. consumers and the factors that affect their financial well-being. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Read the publications, available through the link(s) above, for complete information including important disclosures.
Please visit our Bank of America Institute webpage for a compilation of prior publications. This message and any attachments, is for the intended recipient(s) only, may contain information that is privileged, confidential and/or proprietary and subject to important terms and conditions available at If you are not the intended recipient, please delete this message. UNSUBSCRIBE now to stop receiving Institute Insights emails from Bank of America Institute.
Please do not reply to this email, as email replies are not monitored. Contact Us Privacy Security 100 N Tryon St, Charlotte, NC, 28255-0001 (C)2026 Bank of America Corporation. All rights reserved.
This email was sent to: MAP6207679
Sources & References
How we cover this story