Trader Kevin Lodewick, right, works on the floor of the New York Stock Exchange Wednesday, Jan. 14, 2015, in New York. Stocks are falling and bond prices are rising following some discouraging news on the U.S. economy and a weaker forecast of global growth. (AP Photo/Richard Drew)

Markets might be efficient, but, boy, can they be stupid sometimes.

The latest brouhaha came, like it did a few months ago, over a surprisingly bad retail number. Markets expected it to fall 0.2 percent in December, but in reality it fell 0.9 percent.

Cue the freakout: The Dow was down 300 points at 1:30, falling about 1.75 percent. Bond yields on U.S. Treasury debt are falling, too, a sign that people are hunting for safety.

Retail Treasuries

Investors, you see, are worried that the U.S., which has been the brightest spot in the global economy's dull picture, might not be immune to the slowdown that's hitting the rest of the world. So, as you can see above, they've stampeded into the open arms of Uncle Sam and its ultra-safe debt, briefly pushing yields on 10-year Treasury bonds below 1.8 percent. Even more incredibly, 30-year Treasury yields hit an all-time low of 2.39 percent, breaking the record they'd set three years ago. (Think about that: markets are basically saying there's no chance of inflation picking up by ... 2045).

This is at least a little silly. What do you believe more: that consumers pulled back right after falling oil prices put more money in their pockets, or every other piece of economic data from the last six months that says the recovery is accelerating? And besides, isn't it possible that lower prices at the pump, which are a part of retail sales, explain its weakness? Why, yes, yes it is. As economist Ian Shepherdson points out, if you look at retail sales over the past year, and not the past month, they've grown 1.8 percent overall, but 5.4 percent if you take out gasoline. That's pretty good.

Now, maybe Treasury yields should be falling because Europe's are, since people would rather buy U.S. debt that pays them 1.8, or even 1.7 percent, or rather than German debt that pays them 0.4 percent. And maybe they should be falling because U.S. inflation is, too. But borrowing costs shouldn't be declining because people are afraid the U.S. recovery is losing steam. Everything says the opposite is happening. Austerity is over, lower oil prices are helping consumers, housing has yet to bounce back, and interest rates should be historically low, if not zero, for a long time still.

The little recovery that could, in other words, is on its way from not-so-great to not-so-bad.