Retail Sales Will Highlight Short Trading Week

Apr 15, 2019
People shopping in a mall

Retail Sales Highlights Short Trading Week

Financial markets will be closed in observance of Good Friday but the holiday-shortened week still offers plenty of economic data headlined by March retail sales which is due on Thursday. Other reports include the March Industrial Production (Tuesday), and Leading Index (Thursday), along with Housing Starts and Permits (Friday) and the April Empire Manufacturing Survey (today). Expectations are for all the reports to show nice pops versus prior month results with the important retail sales figures forecast to lead the rebound after a somewhat soft February. The expected bounce in most economic releases this week, along with what is traditionally a tough period seasonally for Treasuries, could put fixed income prices under some pressure, especially with lighter volumes expected during the holiday-shortened trading week. Following up on the selling last Friday, this week may provide attractive entry points for those looking to put some funds to work.

Treasury Curve Today Week Change
3 Month 2.42% UNCH
6 Month 2.45% UNCH
1 Year 2.43% +.01%
2 Year 2.40% +0.06%
3 Year 2.37% +0.08%
5 Year 2.38% +0.07%
10 Year 2.57% +0.06%
30 Year 2.97% +0.05%
Short-Term Rates
Fed Funds 2.50%
Prime Rate 5.50%
3 Mo LIBOR 2.60%
6 Mo LIBOR 2.64%
12 Mo LIBOR 2.75%
Swap Rates
3 Year 2.437%
5 Year 2.419%
10 Year 2.554%
Economic Calendar
Date Statistic For Briefing Forecast Market Expects Prior
Apr 15 Empire Manufacturing Apr 8.0 10.1 actual 3.7
Apr 16 Industrial Production (MoM) Mar 0.2% 0.1% 0.0%
Apr 16 NAHB Housing Market Index Apr 64 63 62
Apr 18 Retail Sales (MoM) Mar 0.9% 1.0% -0.2%
Apr 18 Retail Sales Ex Auto & Gas (MoM) Mar 0.5% 0.4% -0.6%
Apr 18 Retail Sales Control Group Mar 0.5% 0.4% -0.2%
Apr 18 Leading Index Mar 0.4% 0.4% 0.2%
Apr 19 Housing Starts (MoM) Mar 5.9% 5.9% -8.7%
Apr 19 Building Permits (MoM) Mar 0.7% 0.7% -2.0%

calendar icon Top 5 Events for the Week

APR 15 - 19, 2019

1.  March Retail Sales – Thursday
2.  March Leading Index – Thursday
3.  March Industrial Production – Tuesday        
4.  March Housing Starts & Permits — Friday
5.  April Empire Manufacturing Survey — Monday


1.  March Retail Sales – Thursday

The monthly retail sales report have been getting more attention than usual after the striking weakness in December was only partially reversed in January with weakness returning in February. The good news is a rebound is expected. The all-important control group reading (which is a direct GDP input) is expected to increase 0.5% versus -0.2% in February. Overall sales are expected to increase a whopping 0.9% versus –0.2% in February as an increase in gas prices flow through the numbers. Sales ex-autos & gas, however, are expected to be up a solid 0.5% versus a disappointing -0.6% in February indicating the bounce is more than just increases in gas prices. The rebound in the control group and sales ex-autos and gas should provide a little boost to first quarter GDP estimates. Presently, the Bloomberg consensus GDP estimate is 1.6% while the Atlanta Fed’s GDPNow model is calling for 2.3% GDP.


2.  March Leading Index – Thursday

The Conference Board’s Leading Index is a compilation of metrics that tend to lead the economy. That in itself is useful but perhaps more important these days it also has a solid record of predicting recessions. As the chart below shows, the index always falls below zero prior to a recession and currently the index has been flirting with the zero-level. The index, however, will need to move below -1.0 to provide a reliable recession signal. That being said, the March number is expected to increase to 0.4 versus February’s 0.2. If the index matches expectations it will be another signal that while a slowing economy is expected, the probability of dipping into recession remains remote.

Leading Index and Recessions


3.  March Industrial Production – Tuesday

Expectations are for March industrial production to increase 0.2% month-over-month versus 0.0% the prior month.   The average over the past year has been 0.3% so a slight below -trend print is expected. Stripping out the volatile utility component manufacturing is expected to be up 0.1% versus –0.4% the prior month.  The average over the past year has been 0.1% so an average print is expected. Finally, capacity utilization is expected to be 79.2% versus 79.1% the prior month. In total, a decent read from the manufacturing/industrial sector is expected and may provide another data point that says the goods-producing economy is bouncing back after the end-of-year inventory run-off and overseas weakness slowed activity.


4.  March Housing Starts & Permits — Friday

Friday will bring another read on the housing market with March Housing Starts and Permits and the report is expected to show a nice pop in starts while permits are expected to increase slightly. Housing starts are expected to increase 5.9% month-over-month to an annualized starts figure of 1.230 million versus 1.162 million in February. Building permits, which aren’t subject to the vagaries of weather, are expected to increase a more modest 0.7% month-over-month to 1.300 million annualized versus 1.291 million in February. In summary, a mostly positive read on starts and permits is expected.


5. April Empire Manufacturing Survey — Monday

The New York Fed’s Empire Manufacturing Index is a survey of general business conditions of manufacturers in the tri-state New York Fed area. It’s a good leading index of the manufacturing sector and it’s expected to post an upside increase in April to 8.0 versus 3.7 in March. Despite the expected increase, the index has averaged 16.0 over the past year so the decline after year-end is expected to reverse but still not return to the levels that prevailed for much of the last year.



bar graph icon  Investment Yield Ranges Over Last Year


US TreasuriesFHLB Agency BulletsMortgage Backed SecuritiesMunicipalsUS Corporate - FinancialsUS Corporate - Financials 

Source: Bloomberg



Tom Fitzgerald Signature 

Thomas R. Fitzgerald

Director, Strategy & Research


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