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[Bond_Guy]

I was playing around with government statistics tonight. I know, it sounds fun. I was testing see if there is a correlation between retail sales for May 2007 and tomorrow's CPI numbers. One thing I knew, retail sales was stronger than expected (+1.4% for May 07). Was this because of greater number of items purchased or same the number of items that cost more? Here is some data to examine: Apr-07 May-07 Increase % Chg Retail Sales (total) 372631 377885 5254 1.410% Food & Energy Gasoline Stations 35046 36374 1328 3.789% Grocery Stores 42277 42422 145 0.343% Food & Beverage Stores 47403 47547 144 0.304% Food Services & Drinking Places 36923 37164 241 0.653% Retail Sales (exc. Food & Energy)210982 214378 3396 1.610% What is interesting is that excluding food and energy from the May 07 retail sales made the percentage change go up! Did people really buy more cars, clothes, household goods, etc in May or did they just cost a bunch more? Maybe it's a combination of both. Now an upside core CPI should send bond yields higher and stocks down. However, inflation is only one of the reasons for the recent higher yields. The others include credit risk spreads which are widening from historic lows and either outright selling or lack of buying of our Treasuries notes and bonds by foreigners. Either way, it's hard for me to see the ten-year yield go down from here. I guess I'll know more at 8:30 am.

[relax]

Interesting! we will see today - wonder if they manipulate the figure so that it shows .2 and then the rally can continue

or if they make it show .3 and then the shorts get a pay day

I was playing around with government statistics tonight. I know, it sounds fun. I was testing see if there is a correlation between retail sales for May 2007 and tomorrow's CPI numbers. One thing I knew, retail sales was stronger than expected (+1.4% for May 07). Was this because of greater number of items purchased or same the number of items that cost more?

Here is some data to examine:

Apr-07 May-07 Increase % Chg

Retail Sales (total) 372631 377885 5254 1.410%

Food & Energy
Gasoline Stations 35046 36374 1328 3.789%
Grocery Stores 42277 42422 145 0.343%
Food & Beverage Stores 47403 47547 144 0.304%
Food Services & Drinking Places 36923 37164 241 0.653%

Retail Sales (exc. Food & Energy)210982 214378 3396 1.610%

What is interesting is that excluding food and energy from the May 07 retail sales made the percentage change go up!

Did people really buy more cars, clothes, household goods, etc in May or did they just cost a bunch more?
Maybe it's a combination of both.

Now an upside core CPI should send bond yields higher and stocks down. However, inflation is only one of the reasons for the recent higher yields. The others include credit risk spreads which are widening from historic lows and either outright selling or lack of buying of our Treasuries notes and bonds by foreigners.

Either way, it's hard for me to see the ten-year yield go down from here.

I guess I'll know more at 8:30 am.