Treasury prices are lower again today following a hotter-than-expected January inflation report, pushing 5-year and 10-year yields up 5 basis points. Not surprisingly, the report is weighing on equity markets as well, with S&P 500 futures currently down 25 points before the open. Headline CPI was up 0.5% m/m in January, boosted by a 3% increase in energy prices. Excluding food and energy, core CPI was up 0.3% m/m versus expectations for a 0.2% gain. At the same time, the prior month was revised down from 0.3% to 0.2% (i.e., January % gain impacted by lower base in December). On a year-over-year basis, headline CPI was up 2.1% (1.9% expected), and core CPI held unchanged at 1.8% (1.7% expected).

The January retail sales data was less constructive. Advance sales fell 0.3% m/m (+0.2% expected), and the prior month was revised down from 0.4% to 0.0%. A 1.3% decline in autos/parts sales weighed on the headline figure, but other metrics within the report were disappointing as well. The control group, which feeds into the GDP calculation, was unchanged from the prior month (0.4% expected), and the December figure was revised 50 bps lower to -0.2%.

Jason Haley
Managing Director, Investment Management Group

02/12Monthly Budget Statement$51.0b$49.2b$51.3b
02/13NFIB Small Business Optimism105.3106.9104.9
02/13Revisions: Producer Price Index
02/14MBA Mortgage Applications-4.10%0.70%
02/14CPI MoM0.30%0.50%0.10%0.20%
02/14CPI Ex Food and Energy MoM0.20%0.30%0.30%0.20%
02/14CPI YoY1.90%2.10%2.10%
02/14CPI Ex Food and Energy YoY1.70%1.80%1.80%
02/14CPI Index NSA247.599247.867246.524
02/14CPI Core Index SA255.287254.426254.398
02/14Retail Sales Advance MoM0.20%-0.30%0.40%0.00%
02/14Retail Sales Ex Auto MoM0.50%0.00%0.40%0.10%
02/14Retail Sales Ex Auto and Gas0.30%-0.20%0.40%0.00%
02/14Retail Sales Control Group0.40%0.00%0.30%-0.20%
02/14Real Avg Weekly Earnings YoY0.40%0.70%0.90%
02/14Real Avg Hourly Earning YoY0.80%0.40%0.60%
02/14Business Inventories0.30%0.40%
02/15Empire Manufacturing1817.7
02/15Initial Jobless Claims228k221k
02/15Continuing Claims1925k1923k
02/15PPI Final Demand MoM0.40%-0.10%0.00%
02/15PPI Ex Food and Energy MoM0.20%-0.10%
02/15PPI Ex Food, Energy, Trade MoM0.20%0.10%
02/15PPI Final Demand YoY2.40%2.60%
02/15PPI Ex Food and Energy YoY2.00%2.30%
02/15PPI Ex Food, Energy, Trade YoY2.30%
02/15Philadelphia Fed Business Outlook21.622.2
02/15Industrial Production MoM0.20%0.90%
02/15Manufacturing (SIC) Production0.30%0.10%
02/15Capacity Utilization78.00%77.90%
02/15Bloomberg Consumer Comfort54.4
02/15NAHB Housing Market Index7272
02/15Total Net TIC Flows$33.8b
02/15Net Long-term TIC Flows$57.5b
02/16Import Price Index MoM0.60%0.10%
02/16Import Price Index ex Petroleum MoM0.10%-0.20%
02/16Import Price Index YoY3.00%3.00%
02/16Export Price Index MoM0.30%-0.10%
02/16Export Price Index YoY2.60%
02/16Housing Starts1235k1192k
02/16Housing Starts MoM3.60%-8.20%
02/16Building Permits1300k1302k1300k
02/16Building Permits MoM0.00%-0.10%-0.20%
02/16U. of Mich. Sentiment95.395.7
02/16U. of Mich. Current Conditions111.1110.5
02/16U. of Mich. Expectations87.286.3
02/16U. of Mich. 1 Yr Inflation2.70%
02/16U. of Mich. 5-10 Yr Inflation2.50%