The bond market received a respite from the recent volatility as yields were only slightly changed by week's end. After trending lower for much of the week, yields were lifted on Friday by a very strong retail sales report. The release demonstrated that, despite the burgeoning trade war and geopolitical tensions, the domestic economy remains on reasonably strong footing.
The 0.5% advance in May's retail sales was paired with a large upward revision to April's results, moving the prior negative reading to a 0.3% gain. The strong spending reflected consumers' confidence, which flows directly from the robust labor market and recent wage gains. This was verified in Friday's University of Michigan consumer confidence release, as the survey's current conditions index notched a gain. However, the overall index declined due to a drop in the expectations measure, with 40% of survey respondents making unprompted negative comments about the likely impact of tariffs.