Slumping Retail Sales, which were expected to increase 0.4% and instead dead flat, are helping boost mortgage bond pricing today. Retail Sales is now -0.4% year over year. Remember that the consumer makes up almost 70% of GDP in the United States, so any kind of downturn has a big impact on other economic data.
The Employment Cost Index dropped for the fourth quarter from 0.8% to .07%. Again, it’s a small change but with Labor contributing about 60% of GDP, any kind of shrinkage is not inconsequential.
MBS are up about 40 bps since last Thursday, hopefully heading back up toward highs from the first of the year. And the 10 Year has broken beneath 4.20% to sit at 4.14%.
