Breaking Down The Paradoxical Reaction to Retail Sales

Today's Retail Sales headline may have missed the mark versus forecasts, but the internal components told a more upbeat tale.  Sales were up just as much as expected when excluding auto sales.  Nonstore retailers (basically, online sales) rose 1.2%, making it the 2nd best month in nearly a year and the highest since December 2022.  That's not the sort of thing we'd expect to see in an economy on the verge of a recession.  With the rest of the relevant AM data coming in better than expected, it was off to the races for bond sellers.  That said, the racetrack is still confined to the same old narrow range.

Econ Data / Events
    • Retail Sales
      • 0.4 vs 0.7 f'cast, -0.6 prev
    • Industrial Production
      • 0.5 vs 0.0 f'cast, 0.4 prev
    • Builder Confidence 
      • 50 vs 44 f'cast, 45 prev
Market Movement Recap
08:44 AM

Slightly stronger overnight, but now weaker after Retail Sales data.  10yr up 1.3bps at 3.521 and MBS down just over a quarter point.

01:29 PM

Additional weakness into the noon hour, but recovering a bit since then.  10yr up 4bps at 3.549.  MBS down 5 ticks (.16).

03:05 PM

Sideways in a narrow range for over an hour now.  10s hit the 3pm close up 4nps at 3.548.  MBS are down 5 ticks (.16).

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