Here is what we learned this week about the US economy from the numbers:
- US retail sales were strong, the control group rose 0.8% compared to 0.5% exp. The Beige Book also had positive comments.
- Inflation was a touch higher than expected in all measures
- Initial jobless claims show improvement in the jobs market
- Manufacturing is mixed, Empire soft and Philly strong
- Housing might be a trouble spot with soft housing starts but it’s too early to say
What’s the takeaway? The economy is in decent shape. It might not be the Spring snap-back in the economy some were looking for but the Fed is on track to taper and hike next year.
The tell (as it often is) was in the bond market where 10-year yields refused to break below the March lows and are now at a one-week high, rising 9 bps today.
The trend in five-years is even more stark. The pair has snapped back this week and a series of higher lows is unmistakable.
