Unfortunately, this is pre-Katrina data and may not reflect what we're likely to see in the next couple of months.
If you put the two months together it still looks as if retail sales were strong at the beginning of the year -- an average increase of 0.8 percent for each of the two months.
If you look at the 12-month change in producer prices, it's positive 0.9 percent. As recently as May, the 12-month change was negative 2.8 percent -- so there were a lot more deflationary pressures earlier in year, and those seem to be abating.
If you look back at the'70s and'80s, the Fed was perceived to be the man behind the curtains. Today, it's looked at as a more prominent player. I'd say (Greenspan's) better known than members of the Supreme Court, and that wasn't true of his predecessors.
Yields have risen to levels where buyers looking for yields are willing to take a risk and buy.
(The data are) suggesting the decline we've seen in the dollar over the last couple of years is not having an impact. It suggests the dollar may still need to fall to help narrow the trade deficit. But there's a risk to higher inflation if it does.
It speeds up the time that the Fed will probably think about raising rates and that's negative for fixed-income.
The big number is the employment number on Friday. If that number comes in weak for the third consecutive month, views on the Fed are likely to change significantly.
The bond market liked the inflation data. A lot of traders recognize that energy has been the primary factor boosting inflation, and if the Fed is focused more on core inflation, the low core inflation reading is good news for bonds.
The bond market had been thinking that the weak economic numbers that we've seen would cause the Fed to think twice about raising rates,
