Bond Market Update

Data Recon

• Total retail sales were unchanged month-over-month in December (Briefing.com consensus: 0.4%) following a 0.6% increase in November. Excluding autos, retail sales were also unchanged month-over-month (Briefing.com consensus: 0.4%) following a downwardly revised 0.4% increase (from 0.5%) in November.
  • The key takeaway from the report is that spending on goods was down across most discretionary categories following some decent-sized gains in November. That will foment some concern about consumer spending fatigue at the end of last year, which of course included the holiday shopping period.
• The Q4 Employment Cost Index increased 0.7% (Briefing.com consensus: 0.8%), seasonally adjusted, for the three-month period ending in December 2025, following a 0.8% increase for the three-month period ending in September 2025. The key takeaway from the report is that there was some moderation in employment costs on a year-over-year basis that will help temper inflation worries.
• December Import Prices (Actual 0.1%) and Nonfuel Import Prices (Actual 0.4%); Export Prices (Actual 0.3%) and Nonagricultural Exports (Actual 0.3%)
• Yield check:
  • 2-yr: -2 bps to 3.46%
  • 3-yr: -2 bps to 3.53%
  • 5-yr: -3 bps to 3.71%
  • 10-yr: -4 bps to 4.16%
  • 30-yr: -5 bps to 4.80%