What a Week: Bear Rout

If last Friday's jobs report lent credibility to the bulls, this week's retail sales and inflation data sealed the deal. The bears are on the run.

The turnkey for the attitude adjustment was the bond market losing faith in its bets on rate cuts and recession. Through much of autumn, the Treasury market's conviction that rate cuts were coming left a blemish on many investors' and economists' bullish outlook.

The onus seemed on the soft-landing optimists to prove the weakness in autos, housing and manufacturing would not spill over into the rest of the economy. The burden of proof has shifted to the bears, and they are having a harder time showing that growth is weak, and that housing could still do widespread damage. For now, Goldilocks is in the house and sitting at the table.

Capped by a flat reading in the headline and core consumer price indices for November, the week was filled with soft-landing numbers. Initial jobless claims slipped for a second week in a row. Retail sales for November soared past consensus expectations, and October's sales were revised upward.

Mortgage applications had another blockbuster week. Industrial production jumped more than expected, and foreigners are still buying our Treasury bonds. Almost fading into the background this week was Tuesday's meeting of the Federal Open Market Committee, which left the fed funds rate steady at 5.25% for the fourth meeting in a row.