Strong Retail Sales Move Interest Rates Higher

This morning retail sales for December were announced as being fairly strong which moved the 10 year treasury up by 3-4 basis points.  Additionally core consumer prices moved up by .3% the strongest gains in nearly a year.  Overall the CPI moved up just .1%.

With rising fuel prices we could see these numbers come in a bit higher in the months ahead.  Additionally with the tax cut there most certainly will be some strengthening in consumer spending in the spring.

As we noted yesterday we think rates will hang in the 2.54% to 2.60% area for the next week or 2, but we need to be mindful that if rates pop above 2.60% we will have some negative income securities-in particular in the REITs which are trading at 52 week lows right now.