The market saw some big pieces of data this week, with CPI, PPI and Retail Sales all released, along with the U.S. and China signing phase one of their trade deal. We also saw the start of earning season for corporate companies report Q4 earnings. Stocks continued to push higher this week, although bond yields managed to stay in a tight range.
December Retail Sales rose by +.3% on headline, ex-autos sales were up +.7%, with the control group sales up +.5%. Market expectations were for a +.3% on headline, +.5%
in ex-autos, and a +.4% rise on the control group. November headline sales were revised upward from +.2% to +.3%, with ex-autos sales now unchanged from an original +.1%, and a revision to a control group to -.1% from a prior +.1%. Building material sales were higher, up +1.4%, primarily due to warmer weather in December, while auto sales disappointed,
falling -1.3%. Retailers reported solid sales figures overall, although brick and mortar stores did fall behind online sales as consumers focused on electronics, appliances, health and personal care, and sporting goods.
December PPI rose by +.1% on headline, with a +.1% rise on the core measure as well. Looking YoY, headline inflation at the wholesale level increased to +1.3%, while the core YoY measure is now down to +1.1%. The November numbers were unrevised from the original release of unchanged on headline and a -.2% drop in core. Both the headline and core measures today posted below market expectations of a +.2% increase. Within the December report, goods prices climbed +.3%, energy prices rose +1.5%, while food prices fell -.2%. Always a volatile component, trade services fell by -.3% after a -.6% drop in November. This makes up a large part of the headline inflation number, and as long as tariffs are a stark reality and there is more uncertainty about future trade policy, this sector will continue to be a bit erratic.
December CPI rose +.2% on headline, while the core (ex-food and energy) rose by +.1%. Both measures were weaker than market expectations of a +.3% and +.2% increase, respectively. Looking YoY, headline inflation is now up from a prior +2.1% to +2.3%, while core inflation was unchanged from November at +2.3%. Getting back into the details of the report, energy prices rose +1.4%, while food prices were up around +.2%. Overall, the larger core categories, including rents and medical care, continued to show stable price gains MoM. However, there were also a few prices that fell more sharply in the month, which all collectively, contributed to the muted headline increase. These sectors included used car sales, lodging away from home, and airfare. There is nothing from the report today that should skew any policy stance or change in sentiment from the Fed.
Empire State Manufacturing
The New York Empire Manufacturing Index rose to 4.8 from a previous 3.3 print. Although most of the details were mixed, the new orders index fell from 8.1 to 6.3, while the backlog of unfilled orders fell from -.7 to -7.6. Looking at the positives, the shipment index increased, while the number of employees and average workweek both increased as well.