BOND REPORT: Treasury Yields Extend Reversal From Six-week High
Treasury prices rose, and yields fell, after weak retail sales weighed on U.S. government bonds.
The 10-year Treasury note lost 5.9 basis points to 2.341%, retreating from its six-week high of 2.414% hit on May 10. Bond prices move in the opposite direction of yields; one basis point is equal to one hundredth of a percentage point.
The yield for the 2-year Treasury lost 4.8 basis points to 1.299%, while the yield for the 30-year bond, or the long bond, edged off 1.9 basis point to 3.020%.
Despite a spate of economic data showing a steady economic outlook, yields for U.S. government paper slumped. Retail sales gained 0.4%, but was below economists expectation of 0.5%. The tepid growth added evidence of the retail sector's ailing health amid bankruptcies and clutch of woeful earnings in the sector over the past few days. Anemic spending and weak economic growth could dampen inflation expectations, which can be bullish for bonds.
See: Retail sales strengthen in April, brightening economic outlook (http://www.marketwatch.com/story/retail-sales-strengthen-in-april-brightening-economic-outlook-2017-05-12)
One measure of inflation, the core consumer-price index, which excludes energy and food prices, notched 1.9% growth year on year, up 0.2% for April, and hovering close to the Federal Reserve's 2% target (http://www.marketwatch.com/story/us-consumer-prices-rebound-in-april-2017-05-12).
(http://www.marketwatch.com/story/us-consumer-prices-rebound-in-april-2017-05-12)Traders will pay close attention to two Fed speakers on Friday as they look for clarity on the central bank's schedule for reducing its $4.5 trillion balance sheet. If the Fed, a large buyer of Treasurys, leaves the market, yields are likely to head higher.
Philadelphia Fed President Patrick Harker, a voting member of the policy-setting Federal Open Market Committee, will give a speech on the U.S. economic outlook at 12:30 p.m. Eastern.
(END) Dow Jones Newswires
May 12, 2017 09:58 ET (13:58 GMT)