The poor figures for retail sales should underscore for everyone the point the FOMC was making with the insertion of "low income growth" as a constraint on household spending. The accumulated loss of wealth will do nothing but pressure prices lower if retailers want a reasonable quantity of goods flowing through their stores. Absent absolute deflation, remember that wage and salary disbursements are lower this year than last, the pace of sales will eventually grow but quite slow;y. The Fed was right to let everyone know that concern about the upturn is premature to the point of being silly.
The past few months I have given a positive technical picture of the 10-year note, targeting a return to a 3.0% yield. I also noted that, for some odd reason, the seasonals favor falling yields in the second half of the year. I can't explain why that should be so, but it is.
Picking up on the downgrade in growth potential is falling yields -- fundamentals usually catch up with the technicals. Below is an updated chart of the 10-year with 60 minute bars.
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