Higher than expected retail sales print suggests resilience in the economy

The Treasury market received a meaningful input for the debate over the Fed's rate cut in March with a higher than expected retail sales print for December. This suggests strong consumption in Q4, pushing real GDP trackers above 2%. Combined with solid payrolls and core CPI numbers, the real economy appears resilient, reducing the odds of a rate cut until the second quarter. This resulted in price action in the futures market reflecting the reduced probability of a rate cut in March.