This morning, the UMCSI printed a 70.2, which is the worst number since March of last year and, prior to that, the end of 2011. If you were wondering why TLT is up 1.4% today, and XLP is crushing, while XLY and XLF are getting hurt, it's because a slowdown in consumer sentiment is REALLY bad for inflation expectations and retail spending. This further plays into the deflationary trends that have been winning the recent fight in treasuries, and explains why tech seems unconcerned. Consumer Staples is strong off of the back of relative valuation.
If you're not paying attention, this one reading was simple to miss, but we think it's going to be driving market sentiment over the next few weeks. Fundamental sentiment appears to be shifting from a GDP point of view, and we are much less bullish on equities as a whole than we were 4 hours ago.