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Bond market sees trouble where others see green shoots

Santelli Exchange: Bearish momentum across the curve

From the looks of the bond market, you might think the economy was heading south—and fast.

March's retail sales rose 0.9 percent, the first increase after three months of declines but shy of the 1.1 percent expected. It showed consumers were spending again, and the economy is not tipping toward recession. Yet, Treasury yields, which move inversely to pricing, fell along the curve, and the 10-year yield dipped to 1.85 percent from an earlier 1.93 percent.

"Traders are saying: 'Show me, prove it,'" said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi. "I guess 0.9 percent in the scheme of things, given how severe the decline was in December, January and February, isn't enough to offset the loss of sales."