Treasuries fell causing yield to rise after core retail sales showed a higher than expected outcome in December, .7 percent increase versus .2 percent forecast. Retail sales MoM came inline at .2 percent, while both measures were revised down in the previous month. Phily Fed Reserve President Charles Plosser said he had a positive economic outlook and the economy is on “firmer footing.”
Market participants are closely watching economic data since the poor non-farms payroll which showed a multi-year low in job additions at 74K in December. “Another strong data point adds additional credence to the idea the monthly jobs report was an aberration,” said Dan Greenhaus, chief global strategist at BTIG LLC.
Some bullish on the US economy quickly blamed the weak non-farms payroll data on the abnormally cold winter months. It could be an outlier, but it makes one wonder that it was too cold to look for a job or hire someone for a job but not too cold to go shopping. The December retail sales fell from the November retail sales.
Equities rallied after Monday’s sell-off, and the 10Y treasury declined on increased risk appetite. Yields on the benchmark note rose 4 bps to 2.87 percent.
Plosser and Dallas Fed President Richard Fisher, also, mentioned that they was glad that the Fed was able to begin the tapering process. However, Fischer wanted to see cutbacks of $20 billion instead of the projected $10 billion taper.