| NEW YORK, July 15
NEW YORK, July 15 U.S. Treasuries hewed to
narrow ranges on Tuesday, slightly weaker ahead of congressional
testimony from Federal Reserve Chair Janet Yellen, who is
expected to emphasize the central bank's flexibility in policy.
Prices on Treasuries were little changed after data showing
a smaller-than-expected rise in June U.S. retail sales,
including a surprising decline in receipts at automobile
dealerships. However, the view of an economy on sounder footing
at the end of the second quarter remains intact.
Yellen speaks before the Senate Banking Committee at 1000
EDT (1400 GMT) and again to the House Financial Services
Committee on Wednesday as part of its semiannual monetary policy
"The people that were poised for retail sales to shake
things loose got an OK report, and certainly the upward
revisions were supportive of higher five-year yields," said Jim
Vogel, interest rate strategist at FTN Financial in Memphis,
"As for Yellen, I think the more people talk about it, the
less they anticipate any fresh insight into Fed policy," Vogel
said. "The emphasis will be on maintaining a lot of flexibility
of when the Fed decides to move."
Retail sales rose 0.2 percent in June after an upwardly
revised 0.5 percent advance in May, the Commerce Department
reported. Economists polled by Reuters forecast retail sales,
which account for a third of consumer spending, to advance 0.6
The benchmark 10-year U.S. Treasury held steady
at 2.55 percent, down just 2/32 of a point in price.
The 30-year bond was off 4/32 of a point in price, pushing
the yield up to 3.38 percent.
Minutes from the Fed's June monetary policy meeting released
last week acknowledged strengthening of the U.S. economy but
suggested the central bank was unlikely to raise key interest
rates until mid-2015.
"While the minutes clearly signaled an end to the asset
purchase program in October, they were generally perceived as
dovish on the inflation outlook and advocated the use of
macro-prudential measures rather than rate hikes to address
financial stability issues," analysts at Barclays wrote to
clients on Tuesday.
"As such, market expectations of Fed rate hikes remain
subdued and well below the Fed's own forecasts," the firm said.
(Reporting by Daniel Bases; Editing by Lisa Von Ahn)