Goldilocks Bloodies Bonds

Likewise, low risk premiums on high-yield bonds as well as the recent deluge of bond deals point to loose lending standards and lots of liquidity still in the financial system. Credit spreads, or risk premiums, on high-yield bonds slipped to 303 basis points over comparable Treasury bond yields. Spreads haven't crossed below 300 since February 2005 (the historic low was 240 basis points in 1997).

Also rubbing the gum in bond traders' hair was another slew of economists who increased their forecasts for fourth-quarter GDP growth. Several economists raised their estimates on Tuesday's dip in the trade deficit, but the retail sales figures provide even more juice.

Banc of America Securities' Peter Kretzmer writes that the retail sales data points to 3% consumer spending growth in the fourth quarter, which "adds to indications of above 2% GDP growth in the quarter." Kretzmer estimates GDP to grow between 2.25% and 2.5% in the fourth quarter.

Northern Trust's relatively bearish Asha Bangalore writes that the sales figures translate into "a slightly faster growth of real GDP" of 2% vs. her previous estimate of 1.6%. The consummate soft-landing bull, Michael Darda of MKM Partners, writes that retail sales puts fourth-quarter GDP growth in the "low 3s" as opposed to the "consensus expectation of growth in the low 2s."