February 14, 2019 No Love for Retail Sales by Lester Murray

Happy Valentine's Day from the Census Bureau. Caught up in the partial shutdown, the Census Bureau has finally gotten around to releasing December's Retail Sales report and many are asking "Where's the love?" The 1.2% overall decline was unexpected as surveys suggested a slight rise was in the offing. It wasn't. Without autos, the decline was even more pronounced with a 1.8% drop from November. As one might expect, bonds are enjoying a nice rally with the Ten-Year up almost a half-point and that has pushed down the yield by six or seven basis points to around 2.65%. Farther out, the long bond is trading a nudge below 3%. 

Inflation Part II came out this morning with the Producer Price Index following up yesterday's CPI report. Core PPI rose 0.3% last month while the all-inclusive headline rate fell by 0.1%.  Year-over-Year, the core rate fell one-tenth to 2.6% while the same measure for the headline rate cratered to 2% from 2.5%. The muted mantra for inflation has been reinforced this week by both CPI and PPI and is playing a supporting role in the week's bond market rally.  Equity prices have opened sharply negative.