Stunning retail sales gains in August, with gains broad based and in the core that feeds into GDP as well as vehicles. Discretionary on restaurants as well. Strengthens the demand side of the inflation equation and why debate has shifted from whether the Fed will raise rates to how far they need to raise rates to derail an inflation rooted in both demand and supply shocks.

Was on @nbc earlier about the Treasury interventions we are seeing. The market has liquidity problems, which the Treasury can help with on the long end. However, the fundamental problems that we face have not changed: 1) Federal debt issuance held by the public eclipsed WWII levels earlier this year. Deficits and debt continue to rise. 2) Inflation is still a worry and the conflict is still with us. Diesel prices get into just about everything. That is a problem. 3) AI-related debt is competing with Treasury debt. 4)If we issue shorter term debt to lower long term yields, it will need to be financed sooner, and likely at higher rates. 5) Sovereign debt issuance has soared, which is already exceeding demand a jet rise in rates needed to get investors to lend. 6) Gulf states with large wealth funds need to turn even more inward due to Middle East conflict. That means less demand for debt and more defense outlays, another issue global in scope and inflationary. Dovetails with the AI boom. Bottom Line: we get some relief in long duration rates, including mortgages but the trend is still in the wrong direction on rates. Even with interventions, rates still above the level prior to rate cuts by the Fed. Rate hikes are going to make the short end duration rise, which is even more interest expense. Bond vigilantes getting restless in this debt environment.