(Updates with late New York prices)
By Daniel Bases
NEW YORK Aug 19 U.S. Treasury yields rose on
Tuesday after unexpectedly strong housing data but only a modest
increase in consumer inflation for July, pushing them up from
last week's 14-month lows.
"Inflation data is neither here nor there, but the housing
data is a little bit more bearish for Treasuries. I think we'll
be relatively rangebound," said Thomas Simons, money market
economist at Jefferies LLC in New York.
U.S. housing starts rebounded strongly in July, pointing to
momentum in the economy, but a moderate increase in consumer
prices suggested the Federal Reserve has room to keep U.S.
interest rates low for a while.
Housing starts surged 15.7 percent last month to a
seasonally adjusted annual 1.09 million unit pace, the Commerce
Department said on Tuesday, snapping two straight months of
declines. Economists had forecast starts to rise to a
The U.S. Labor Department said its Consumer Price Index
edged up 0.1 percent last month as declining energy costs
partially offset increases in food and rents.
"I think people are realizing that inflation is, at least
for now, stabilized and heading back to a more normal level and
not accelerating," said George Goncalves, head of rates strategy
in the Americas at Nomura Securities in New York.
Investors await Wednesday's minutes from the July 29-30 Fed
meeting, as well as Fed Chair Janet Yellen's speech at the
annual gathering of central bankers in Jackson Hole, Wyoming on
"In the minutes, people will be looking for an exit
strategy, but given data we have had, no one is expecting it to
come sooner than previously expected. Fed futures are looking to
September 2015 and expectations in the market come around that
time frame, which is late 2015," Jefferies' Simons said.
Benchmark 10-year U.S. Treasury notes fell in
late morning trade and held steady through the day with a loss
of 4/32 of a point in price and a yield of 2.40 percent. Prior
to the data, the 10-year was up roughly a quarter of a point.
The 30-year bond dropped 10/32 of a point in
price, pushing the yield up to 3.21 percent. The long bond had
been up as much as half a point in price before the data.
(Reporting by Daniel Bases; Editing by Nick Zieminski and James