Bond Market Update

Data Recon

• Total retail sales were up 0.2% month-over-month in June (Briefing.com consensus: 0.2%) following an upwardly revised 1.0% increase (from 0.9%) in May. Excluding autos, retail sales were down 0.2% month-over-month (Briefing.com consensus: 0.1%) following an upwardly revised 1.0% increase (from 0.8%) in May.
  • The key takeaway from the report is that the headline disappointments are misleading, as they were driven primarily by gasoline station sales (-5.3%). Excluding gasoline stations, retail sales were up a solid 0.7% in June on the heels of a 0.9% increase in May.
• Initial jobless claims for the week ending July 11 decreased by 8,000 to 208,000 (Briefing.com consensus: 219,000). Continuing jobless claims for the week ending July 4 were down 16,000 to 1.805 million.
  • The key takeaway from the report is that initial jobless claims remain historically low and a signpost for a labor market that is still light overall on layoff activity.
• The Philadelphia Fed Index surged to 41.4 in July (Briefing.com consensus: 11.0) from 10.3 in June. The dividing line between expansion and contraction for this report is 0.0, so the July reading marks a notable acceleration in manufacturing activity in July in the Philadelphia Fed region versus the prior month.
  • The key takeaway from the report is that its strength was concentrated in new orders, shipments, and employment conditions, all of which were pitted against a relatively tame bump in the prices paid index.
• Yield check:
  • 2-yr: +4 bps to 4.17%
  • 3-yr: +4 bps to 4.22%
  • 5-yr: +4 bps to 4.30%
  • 10-yr: +4 bps to 4.59%
  • 30-yr: +4 bps to 5.12%