Bond Market Update

Data Recon

• Total retail sales increased 1.7% month-over-month in March (Briefing.com consensus: 1.3%), driven by a 15.5% increase in gasoline sales, following an upwardly revised 0.7% increase (from 0.6%) in February. Excluding autos, retail sales surged 1.9% (Briefing.com consensus: 0.9%) following an upwardly revised 0.7% increase (from 0.5%) in February.
  • The key takeaway from the report is that retail sales look great from a headline perspective, but higher gas prices and higher prices in general were the main drivers. Excluding gasoline sales, retail sales were up 0.6% month-over-month, which looks good, but remember retail sales are not adjusted for price changes. Accordingly, it becomes evident that the sales gains in March were driven more by higher prices than increased volume, which is a better indication of demand.
• Yield Check:
  • 2-yr: +4 bps to 3.76%
  • 3-yr: +4 bps to 3.77%
  • 5-yr: +3 bps to 3.88%
  • 10-yr: +2 bps to 4.27%
  • 30-yr: UNCH at 4.88%