Last time we saw a Retail Sales report, the forecast called for a move back to +0.3 after the worst 2-month stretch since the onset of the financial crisis.  Those two months came in at -0.9 and -0.8 for a total 2-month slide of -0.17.  The previous 2-month record holder in mid 2012 only managed -0.11.  But instead of breaking into positive territory, Retail Sales backtracked another -0.6.

This is a report that has a good track record of motivating bond market movement.  It's hit and miss in terms of how pronounced the reactions have been, but certainly there have been some big ones.  It would have been more than fair to expect the surprisingly weak showing in the last report was grounds for a bigger bond market rally.  Instead, bonds ended up in negative territory by the end of the day (though they did rally fairly well on the initial news).

The dark horse back then was a wretchedly persistent bounce in European Bond markets.  German Bunds had just bottomed out after mind-bending 20bp rally over the course of several days (official inception of QE purchases) and were clearly ready for their first corrective move.  Treasuries and MBS had also been rallying, and although it wasn't on the same scale as Europe, global bonds agreed to cool their jets on the approach to March 18th's FOMC Announcement.  In the end, Retail Sales ended up being lost in the shuffle.  Indeed its effects are impossible to distinguish from any other random movement unless you know what you're looking for (even then, it still blended in!). 

All that to say, there's no guarantee that Retail Sales will have a big effect.  That said, it could be argued that they would have had a bigger effect last time were it not for bigger gorillas in the room.  Moreover, data is more interesting now than it was in early March when European markets still had the "New QE smell" and when we were getting ready to hear from the Fed after 2 very strong jobs reports.  Now that we've had the rotten jobs report and a slew of other tepid-to-weak data, every little bit of evidence informing that bigger picture is useful.