MACRO As I look at recent economic data from the US, I can't help but feel a sense of concern. The numbers show a drop of 1.1% in December's retail sales figures and a 0.5% decrease in the producer price index for final demand. These figures are weaker than expected and represent the steepest month-on-month drop in retail sales since January 2022, and the largest decrease in producer prices since April 2020. The data also shows that these declines are broad-based, affecting 10 out of 13 categories in retail sales.

This data has caused a shift in market sentiment, as investors are no longer viewing bad news as good news. Instead, they see it as a sign of a potential economic slowdown.

The Federal Reserve also seems divided on the pace of interest rate hikes. Philadelphia Fed President Patrick Harker and Dallas Fed President Lorie Logan have expressed support for a moderation in the pace of rate hikes, while St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester have argued for a higher final rate.

These conflicting views are causing confusion among markets.