● US retail sales jump in a sign of more confident consumers | USN&WR
● US jobless claims inch up to 279,000 in first week of June | MarketWatch
● Consumer Comfort in US Falls for a Record 9th Straight Week | Bloomberg
● US business inventories post largest gain in nearly a year | Reuters
● Eurozone Industrial Production Growth At 3-month Low In April | RTT
● IMF walks out of Greek creditor negotiations | The Independent
● Keeping Greece in Euro May Be Unrelated To Finances | Bloomberg

Retail sales revived last month, rising 1.2% in May, according to this morning’s monthly report from the US Census Bureau. The monthly advance represents a substantial improvement over April’s sluggish 0.2% increase. The news provides support for projecting that US economic growth in the second quarter won’t repeat the weak run in Q1.
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US Treasury yields continued to rise yesterday, with the rate on the benchmark 10-year Note reaching 2.50%–the highest level since last September, based on data from Treasury.gov. Meanwhile, the 2-year yield—considered the most sensitive spot on the yield curve for rate expectations—ticked up to a four-year high of 0.75% on Wednesday (June 10).
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● U.S. Mortgage Applications Surge 8% in Advance of Rate Hikes | WPJ
● U.S. Annual Budget Deficit Smallest in Nearly 7 Years | WSJ
● Bond crash across the world as deflation trade goes horribly wrong | Telegraph
● World Bank Lowers Global Growth Outlook, Urges Fed To Delay Rate Hike | RTT
● S&P downgrades Greece after IMF repayment delayed | Reuters
● Greece bailout talks: stocks surge on rumours of German compromise | Guardian

US retail sales are expected to increase 0.5% in tomorrow’s May report vs. the previous month, according to The Capital Spectator’s average point forecast for several econometric estimates. The mean prediction reflects a modest improvement vs. the previous month’s flat performance. Recent surveys of economists, by contrast, project a substantially stronger rate of growth for retail spending in May.
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Vanguard founder John Bogle tells Benzinga that he expects a long-term nominal return on the US stock market of roughly 7.0% a year, based on a current dividend yield of around 2.0 percent plus expected earnings growth of 5.0%. In the years ahead, however, he thinks that the market’s valuation will slide to a price-earnings ratio of 15 from the current 20, which pares the near-term return forecast to around 4.0%. But it gets worse. “When you factor in the costs associated with index funds, inflation, and taxes, you are actually looking at real returns of nominal to zero,” Bogle said.
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● Job openings in US hit 14-year high in April | USA Today
● US small-business optimism index rises to 5-month high in May | MarketWatch
● German bond yield at 1% for the first time since September | Reuters
● French industrial output falls unexpectedly in April | MarketWatch
● UK Industrial Output Growth Slows In April | RTT
● China’s economy to pick up in H2: central bank economists | Reuters

The econometric evidence continues to mount that May wasn’t the start of a new recession in the US. The latest clue is yesterday’s monthly update of the Federal Reserve’s Labor Market Conditions Index (LMCI), which is designed as a “dynamic factor model that extracts the primary common variation from 19 labor market indicators.” Last month’s reading ticked up to a modestly positive value—1.3—for the first time since February. Running the numbers through a probit model quantifies what casual observation suggests: recession risk was low as of last month.
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● Fed Labor Conditions Index Grows to 1.3 in May | Bond Buyer
● The Conference Board’s US Employment Trends Index Increased in May | CB
● Eurozone GDP confirmed at 0.4% in first quarter | MarketWatch
● China May inflation cools to 1.2% year on year, weaker than forecast | ST
● Greek PM Tsipras says accord possible if pensions are not cut | Reuters
● Should A Robot Be Managing CalPERS Portfolio? | Meb Faber Research

We’ve seen a number of false dawns with anticipating rate hikes in recent years, but is the jig finally up this time? Friday’s surprisingly strong jobs report for May has reignited expectations that the Federal Reserve will soon start raising interest rates for the first time in nearly a decade. The day before the Labor Department released the bullish data the IMF asked the central bank to hold off on monetary tightening until next year. But the trends in key interest rates through last week’s close suggest that sooner rather than later is the new new mantra, again, when it comes to estimating the timing for a US rate hike.
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