Market Snapshot January 12, 2018
Good Friday A.M.,
Oy Vey. Does that give any indication how bonds are doing this a.m.? Both CPI and Retail Sales numbers out today (below) and they were for the most part in line. Maybe a smidge to the stronger side (core CPI .1% higher) but the fly in the ointment was the backward revisions. Of course that is older data, but when taking a two month average, it gives economic hawks screaming for tighter monetary policy validation. Inflation is still below Fed mandates but is creeping up, and with some higher inventory numbers this a.m., GDP should increase. Add in a little corporate tax incentive and sprinkle in some optimism for earnings and voila, we have stocks on a tear and bonds searching for air. On a positive note, bonds gapped down at the open and were off 33bps, the 10-yr back to 2.59%. Since then we have pared back substantially and the 10-yr is at 2.56% and mortgage bonds are -13bps. Small victory, but I am the glass half full guy. Nothing has changed on the economics side, heading into a holiday weekend I would not expect much more from the market. It is important that the 10-yr does not break 2.62% as it could trigger some more selling (as we saw this past week).
CPI for Dec:
Index: Actual 0.1%, Consensus 0.1%, Last 0.4%.
Core: Actual 0.3%, Consensus 0.2%, Last 0.1%.
Retail Sales for Dec:
Index: Actual 0.4%, Consensus 0.4%, Last 0.9%, Revised 0.8%.
Ex-Autos: Actual 0.4%, Consensus 0.4%, Last 1.3%, Revised 1.0%.
Interesting stat: Zillow released that buyers paid more than the asking price in 24 percent of U.S. home sales in 2017, netting sellers an additional $7,000 each on average. Five years ago, 17.8 percent of final sale prices were higher than the asking price.
Have a great holiday weekend and first, make today great!