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When the price cut headline hit this morning, one might have expected bond yields would drop. Instead, they continued their May trend of higher yields.

Walgreens chart courtesy of Stockcharts.Com

Walgreens Joins the Price Cutting Parade

CNN reports Walgreens Is Cutting Prices on 1,500 Items.

Walgreens is joining other retailers in cutting prices across the board, from snacks to toiletries and even Squishmallows, in an effort to lure back inflation-weary shoppers turned off by high prices.

Prices are dropping immediately on more than 1,500 items online and at its stores, which include both name and store brands, Walgreens announced Wednesday. In the past few weeks, competitors including Target, Walmart and Amazon slashed prices on thousands of household goods to rev up consumer spending.

“Walgreens understands our customers are under financial strain and struggle to purchase everyday essentials,” said Tracey D. Brown, Walgreens’ retail president and chief customer officer, in a release. “We continue to be committed to our customers by lowering prices on over a thousand additional items, something we’ve been doing since October of 2023.”

Walgreens Boots Alliance’s (WBA) most recent earnings report, released in March, revealed that the retailers’ second-quarter sales beat expectations, but lowered its full-year earnings outlook because of a “challenging retail environment in the US.”

Shares are down 40% year to date and its next earnings report isn’t expected until June. Meanwhile, a host of other retailers report earnings Thursday, including Dollar General and Costco.

The Walgreens chart is an absolute trainwreck. I suspect something beyond a challenging environment. But weak sales sure don’t help.

Discretionary Spending Tumbles at Target, Shares Drop 10 Percent

Target chart courtesy of StockCharts.Com annotations by Mish

On May 22, I noted Discretionary Spending Tumbles at Target, Shares Drop 10 Percent

Target CEO Brian Cornell said the results show “continued soft trends in discretionary categories.”

Who’s Next at the Confessional?

So its “continued soft trends” at Target and a “challenging retail environment” at Walgreens coupled with lower guidance. Who is next at the confessional?

Bonds Yields Jump Again Wiping Out the May Treasury Rally

Image from Investing.Com in Day-Month-Year order.

Yield on the 10-year treasury is 4.59 percent on May 29, right where it started the month. A quarter-point rally on hopes of rate cuts vanished today.

This morning, I noted Bonds Yields Jump Again Wiping Out the May Treasury Rally

It’s been a tough year for US Treasury bulls. The rally that began in late April on hopes of Fed rate cuts is mostly gone. The continued rally into May is gone.

New Home Sales Huge Negative Revisions

New Home Sales plunged in April. And the Census Department completely revised away the fictional 8.8 percent rise in March.

For discussion, please see New Home Sales Sink 4.7 Percent on Top of Huge Negative Revisions

I see weakness on multiple fronts. The only contrary news was a string of hawkish comments from the Fed.

No Hurry to Cut Rates

Today, Minneapolis Federal Reserve President Neel Kashkari says he wants to see “many more months” of positive inflation numbers before interest rates start to come down — and refused to rule out a rate hike if needed.

I believe he means positive progress towards lower inflation readings.

Fed Minutes Show Willingness for Still More Rate Hikes

On May 22, I noted Fed Minutes Show Willingness for Still More Rate Hikes

It’s interesting that the Fed is finally talking tough just as the economy appears to be weakening on multiple fronts.

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