U.S. import prices decreased 0.5% in April from March, matching economists’ expectations. Export prices dropped 0.7%, the largest decline since June, and steeper than forecasts of a 0.2% dip.

March business inventories, expected up 0.3% were unchanged, February inventories originally reported +0.1% was revised to unchanged. No reaction to the report.

This week after a week with no economic releases, this week we have a number of measurements.. Monday April retail sales are expected to have declined, nothing scheduled on Tuesday, Wednesday and Thursday April PPI and CPI but inflation isn’t a problem and likely the two reports won’t jar the markets. April housing starts and permits Thursday, starts expected to have declined while permits expected to have increased. The May Philly Fed business index is thought to be slightly better, but the index is very close to neutral---not showing much improvement.

The interest rate markets continue to reflect the possible end to the 30 yr old bond market rally that started in 1983 with 30 yr mortgage rates at 17% and the 10 yr note at 18% (bank prime rate at 20%). The action in the rate markets that was triggered by the strong April employment report has not been able to achieve even a modest bounce after rocketing the 10 yr from an intraday low of 1.63% to 1.93% last Friday before ending the week at 1.89%. Mortgage rates up about 15 basis points in rates last week. Japan’s plan to weaken its currency is working against the US bond market; as the yen falls there is less demand for US bonds. Every technical indicator on the bond and mortgage markets is now solidly bearish; last Friday in a Tweet PIMCO co-CEO and bond king Bill Gross declared the end to the declining interest rate rally, even after a month ago Gross said he was increasing PIMCO’s investment in US notes and bonds. Most likely Gross was looking at the magnitude and speed in which rates rose last week.

U.S. retail sales rose 0.1% in April from March, beating expectations for sales to fall 0.3%. Excluding the auto segment, sales were down 0.1%, matching expectations.

The Fed’s easing’s have failed to meet the Fed’s objectives, increasing employment and the economy. There is a growing view that the Fed should begin to think more seriously about winding down its stimulus moves. Fed officials are slowly moving from their strong stand about the easing to more belief that since it isn’t working as it was intended the Fed should start unwinding it soon. It till may be the end of the year but markets are already reacting to the possibility. In the meantime other central banks are increasing their easing stances, maybe it is time to let other banks take up the challenge.