TREASURIES-Prices dip after strong retail sales, jobless data

Thu Mar 13, 2014 10:43am EDT

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* U.S. retail sales rose 0.3 pct last month

* U.S. jobless claims lowest since late November

* Weak China data, geopolitical tensions cap losses

By Sam Forgione

NEW YORK, March 13 (Reuters) - U.S. Treasuries prices edged lower on Thursday on better-than-expected U.S. retail sales and jobless claims data, but lingering concerns over China's economy and geopolitical tensions in Russia and Ukraine limited losses.

The Commerce Department said retail sales increased 0.3 percent last month as receipts rose in most categories, ending two straight months of declines, while the Labor Department said initial claims for state unemployment benefits dropped 9,000 to a seasonally-adjusted 315,000 last week, marking the lowest reading since late November.

Although January retail sales were revised lower, the data was still "in a positive direction" and reduced some demand for safe-haven Treasuries, said Michael Pond, head of global inflation-linked research at Barclays in New York.

The drop in new claims for unemployment benefits and the rise in retail sales, which for about 30 percent of consumer spending, indicated that the U.S. economy could be gaining traction after frigid temperatures disrupted economic activity at the end of 2013 and the start of this year.

The positive data on Thursday followed Friday's report showing U.S. job growth accelerated sharply in February, with employers adding 175,000 jobs to their payrolls after creating 129,000 new positions in January.

"The data is consistent with a rebound taking place," said Jake Lowery, fixed income portfolio manager with ING U.S. Investment Management in Atlanta.

Lingering concerns over Ukraine and Russia and over China's economic growth limited losses in Treasuries prices, however.

"There are certainly concerns over the global growth picture," said Pond of Barclays.

China's industrial output rose 8.6 percent in the first two months of 2014 from a year earlier, the National Bureau of Statistics said on Thursday, missing market expectations for a 9.5 percent rise, while growth in retail sales was the slowest in three years.

The benchmark 10-year U.S. Treasury note last traded down 2/32 in price to yield 2.734 percent, marking a slight decline from late Wednesday, when the yield was at 2.726 percent. Bond yields move inversely to their prices.

The yield on the 30-year Treasury bond, meanwhile, last traded down 1/32 in price to yield 3.67 percent, roughly unchanged from late Wednesday.

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