Bond Market Update

Data Recon

• Total retail sales increased 0.6% month-over-month in November (Briefing.com consensus: 0.4%) following a downwardly revised 0.1% decline (from 0.0%) in October. Excluding autos, retail sales increased 0.5% (Briefing.com consensus: 0.3%) following a downwardly revised 0.2% increase (from 0.4%) in October.
  • The key takeaway from the report is that retail sales rebounded smartly in November after the end of the government shutdown, driven by increases across most discretionary spending categories.
• The Producer Price Index for final demand increased 0.2% month-over-month in November (Briefing.com consensus: 0.2%) following a downwardly revised 0.1% increase (from 0.3%) in October. The Index for final demand, excluding food and energy, was unchanged (Briefing.com consensus: 0.2%) following an upwardly revised 0.3% increase (from 0.1%) in October.
  • The key takeaway from the report is that PPI and core-PPI both increased on a year-over-year basis to 3.0% from 2.8% and 2.9%, respectively, which is to say they moved in the wrong direction to create a true sense of inflation calm and a seeming rate-cut guarantee.
• Yield Check:
  • 2-yr: -1 bp to 3.52%
  • 3-yr: -1 bp to 3.58%
  • 5-yr: UNCH at 3.74%
  • 10-yr: -1 bp to 4.17%
  • 30-yr: UNCH at 4.83%