UMBS opened down 20 bps.  S&P Futures up 17.25

While the retail sales number is a bit below forecast and the revisions makes last month even worse, the higher core PPI reading is more than offsetting the potentially bond-friendly implications.Yields were already slightly higher coming into the data and are now up a few more bps

Core MM PPI  =  0.3 vs 0.2 f’cast,    [0.5 prev]

Core YY PPI   = 2.0 vs 1.9 f’cast,     [2.0 prev]

Headline PPI MM = 0.6 vs 0.3 f’cast,     [0.3 prev]

Retail Sales  = 0.6 vs 0.8 f’cast, -1.1 prev

Retail sales rose 0.6% in February, which was a touch below expectations. On a year-over-year basis retail sales were up 1.5%. These numbers are not adjusted for inflation, so it is an indication that spending is on the weaker side. January’s numbers were revised downward, which is typical these days.

Initial Jobless Claims fell to 209,000 last week.

Biden is proposing a $10,000 tax credit for first-time homebuyers and people who sell their starter home. The admin is also directing FHFA to waive title insurance fees and telling CFPB to go after fees at closing. Ultimately the problem is supply and interest rates, so the going after closing costs and goosing demand probably isn’t going to do much.

Apart from Tuesday (CPI day), today is this week’s next biggest deal in terms of scheduled economic data.  The trifecta included Jobless Claims, PPI, and Retail Sales.  Of these, Retail Sales has been the bigger market mover on average, but by a smaller margin in recent months.  Today’s example missed the consensus, but not by much.  It was also more than offset by unfriendly results in the other two reports.

Core PPI fell to 0.3 from 0.5, but that was higher than expected.  Jobless Claims didn’t help with continued claims moving well under the 1.9m ceiling and with a big downward revision to last week’s 1.906m reading (now 1.794m).  With that, we find ourselves at the end of a CPI/PPI week with yields pushing up toward 4.30% yet again

The world’s biggest bond market sold off after another hot inflation report reinforced bets the Federal Reserve will be in no rush to cut rates even as some areas of the economy show signs of sluggishness. Treasury yields rose as the data underscored the challenges the Fed faces in achieving the “last mile” toward its inflation goal. Following the steps of the consumer-price data, the producer price index also signaled a pickup in cost pressures.

Meantime, retail sales were softer than estimated. While it’s probably way too early to draw any conclusions, the set of figures raised some eyebrows about the specter of stagflation.

UMBS ended the day down 33 bps at 100.56

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