Retail sales tanked in the Christmas shopping season, down 5.5% in November and 8% in December, though ex-retail gasoline sales, where the fall in prices drove things further down, the numbers were -2.5% and -4%, which are pretty worrying too.

I think that when the numbers are adjusted later with more complete data, they will be worse, because customer visits to retailers fell 24% on the weekend before Christmas.

FWIW, it does not look like the rest of the world will be pulling themselves, or anyone else, out of recession soon, as Japanese industrial production fell 8.1% YoY in November, and the Japanese central bank has no where to go with interest rates, having just lowered them to 0.10% (no misplaced decimal).

About the only piece of good news are The Big Picture’s Credit Crisis Indicators, which are showing a bit of improvement, with the TED spread and the LIBOR-OIS spread improving, though rates on Treasuries are still very low.

In the meantime, mortgage rates for a 30 year fixed mortgagehit the lowest number since at least 1971, when Freddie Mac started keeping these records, 5.14%, though there is the caveat that you can get these only if the banks are willing to lend at all.

Note that this is for the “conforming” mortgage, which is packaged and resold by the GSEs, which now have an explicit guarantee from the government, and, as noted earlier, “non-conforming” mortgages are at about 2% more, an all time high.

Oil was up a bit on announcements by suppliers of production cuts by the UAE and House of Saud.

Nothing much happened with currency. The 26th is a day off for most American traders, and Boxing Day in the UK, so there was not much activity.