The Bureau of Labor Statistics announced today that the December reports on Employment, the Consumer Price Index, and the Producer Price Index will be delayed due to the government shutdown. What's more, if the Census and Labor Statistics folks aren't back on the job by early January, it won't be possible to collect the data for the January CPI and PPI on schedule.

But, it looks like the Treasury Department is still in business. The weekly sale of short-term treasury securities was conducted on schedule yesterday. T-bill rates fell dramatically. The discount rate on the three-month bill slumped to 4.91% from a rate of 5.15% last week. The six-month bills were sold at an average discount rate of 5.04% compared to 5.15% last week. All this was probably prompted by the Fed's action last week to lower the Fed Funds rate.

Today the Conference Board released the results of its December survey of consumer confidence. This month's value of the Board's confidence index dropped to 98.7 from an upwardly revised 101.6 figure for November. When the December Conference Board index is averaged with the December value of the University of Michigan confidence index we obtain a value for the composite index of 94.85. This is nearly identical to the revised number of 94.90 for November and still above the recent low of 93.10 in August.

Also today, the National Association of Realtors released its report on seasonally-adjusted existing home sales for November. The November number was down 1.7% from October, and October's number was down 1.9% from September. The October drop was the first monthly decline in six months. Last month I asked, "Could it be that the general economic slowdown is now manifesting itself in the housing market?" Well, it sure looks like it.

There was yet another report on recent retail sales today. Mitsubishi Bank/Shroeder-Wertheim reported that sales at the chain stores they survey were up 1.4% last week compared with the week before. This is consistent with the Telecheck report yesterday which showed that there was a big surge in retail sales the week before Christmas. The Mitsubishi release went on to report that sales in the November/December timeframe only advanced by 0.5% -- the worst performance since 1991, when the economy was coming out of a recession.

A flat short-term trend in consumer confidence, declining sales of existing homes, poor retail sales during the Christmas shopping season: just the kind of news that makes inflation-hating bond market participants jump for joy. Today the 30-Year T-Bond price advanced by 15/32 and the yield dropped to 6.01%. In the 6 trading days since last Monday -- the day before the Fed lowered the Fed Funds rate -- the yield on the 30-Year T-Bond dropped from 6.20% to 6.01%.

Byline: Lafferty (MF Merlin)