January retail sales higher than expected

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Published Date 2/15/2023

Yesterday the 10 increased 5 bps, MBS prices down 25 bps; this morning the 10 started up 2 more bps but by 8:45 am ET back to unchanged. Jan retail sales released at 8:30 am expected +1.7% increased 3.0%, excluding autos +2.3% on estimates of 0.7%, excluding autos and gas +2.6% from -0.7% in Dec. Sales were surprisingly slow in Dec, (-1.1%) an improvement was expected but the magnitude of improvement is more evidence consumers are still quite active. It is a worry point for the Fed trying to cool inflation, with that kind of sales increase the Fed has more to be concerned about.

NY Empire State manufacturing index has been weak, in Jan the index was -32.9, the estimates for Feb -18.5; the index reported -5.8.

At 9:15 am Jan industrial production continues to decline, Dec revised from -0.7% to -1.0% and Jan expected +0.5% was 0.0%. Capacity utilization of manufacturing facilities expected at 79.1% from 78.4% in Dec fell to 78.3%

At 9:30 am the DJIA opened -180, NASDAQ -57, S&P -24. 10 year at 9:30 am 3.78% +2 bp. FNMA 5.5 30 year coupon at 9:30 am -11 bps from yesterday’s close and -18 bp from 9:30 am yesterday.

At 10 am NAHB Feb housing market index, expected at 37 from 35, the index increased to 42.

At 1 pm Treasury will auction $15b of 20 year bonds, usually doesn’t get any market reaction.

Tomorrow Jan PPI on the schedule, another inflation reading; expected +0.4% m/m, year/year +5.5% down from 6.2% in Dec. Core PPI m/m +0.3% from +0.1%, year/year 5.0% from 5.5%. Another confirmation inflation is slowing but it won’t matter to the Fed, the Fed has finally gotten the attention of markets that were hanging on to the idea the Fed was about done increasing rates. For the Fed inflation in wages and overall inflation remain excessively high.

Source: TBWS

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