Retail sales fell a larger than anticipated 1.2%, but the direction was well flagged and it was close enough to median forecasts to be shrugged off. Tame PPI rose 0.1% for both headline and core, but U. Michigan consumer sentiment collapsed to 80.4 from 86.1, with comparable declines in current conditions and expectations sub-components. After only a momentary flutter, stocks resumed their ascent and extended gains 4-5%, in line with similar back-to-back gains in Europe.
After a brief pop higher on the U. Michigan data, it was all downhill. Indeed, there was a bearish buyer of 8,000 puts on Nov 10-years before the data, and though a Midwest bank later bought 10,000 114 March bond calls, the damage was already done on the downside.
The December bond closed down 1-14/32 at 112-11, while the two-year note and 30-year spread steepened ever so slightly back above +300 basis points.
The dollar firmed initially in stocks slipstream, but closed in the middle of its range.