Rates Rise for Fifth Straight Session as Retail Sales Impress

Strong retail sales data, comments from Bullard help lift rates once again. The 10-year Treasury yield climbed 2 bps to close at 1.63% – rising for the 5^th straight session as retail sales proved resilient to rising prices. Meanwhile, Fed St. Louis Fed President James Bullard became the latest official to speak publicly about inflation, saying that the central bank should taper aggressively to avoid runaway inflation. Fed officials remain remarkably divided on the topic, Bullard’s comments coming a day after Fed officials Neel Kashkari and Mary Daly both said that the Fed could commit a policy mistake by overreacting to inflation.

Fed Chair decision expected imminently. President Biden said today that he will announce his Fed Chair nominee “over the next four days.” Betting markets remain divided on who the President will choose between current Fed Chair Jerome Powell and Lael Brainard who is currently a member of the Federal Reserve Board of Governors. Brainard is more dovish than Powell and would almost certainly face a harder confirmation battle than the incumbent Chair.

Retail sales climb for third straight month. Retail sales rose 1.7% in the month of October, eclipsing estimates that had called for an increase of 1.4% – indicating that the American consumer is as strong as ever. Gains were broad-based and looked strong across every category- including those that excluded automobiles and gasoline (a source of significant inflation in recent months). Consumer spending is now higher than it was before the start of the pandemic, even after adjusting for inflation.