UST yields continue to fall, with the 10Y touching 3.99% intraday. The probability of a December Fed cut swings back to 82% from below 30% last week. The less-hawkish commentary from Fed officials and softening data prints are the key catalysts. The September retail sales growth prints weaker-than-expected at 0.2% MoM (vs. est. 0.4%). The Conference Board Consumer Confidence Index plunges to a 7 month-low of 88.7 in November. Big-ticket items sales such as motor vehicles and parts fall -0.3% MoM, while electronics and sporting goods also contract. Labour market softness (see: UST rally despite strong NFP) continues to cloud spending sentiment. With employee compensation accounting for 60% of personal income, any labour market weakness should continue to drag retail sales performance. Meanwhile, further gains in asset markets are unlikely to translate into stronger wealth effects for the broader consumer base. Correspondingly, we note a K-shaped divergence between retail sales and the S&P 500.
On the inflation front, PPI for final demand rises 0.3% MoM and holds at 2.7% YoY in September. Energy aside, producer inflation shows little changes. Front-loaded imports keeping factory-gate prices in check. A potential peace deal between Ukraine and Russia could also help contain oil price and thus the overall inflationary pressure. The upshot is that UST yields are expected to anchor in the near-term. 
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