TREASURIES-Yields rise on strong retail sales, before 20-year auction

 (Adds data, Fed speakers, updates prices)
    By Karen Brettell
    NEW YORK, Nov 16 (Reuters) - U.S. Treasury yields rose on
Tuesday in choppy trading after data showed that U.S. retail
sales increased more than expected in October and before the
U.S. Treasury's sale of 20-year bonds on Wednesday.
    The retail gains came as Americans eagerly started their
holiday shopping early to avoid empty shelves amid shortages of
some goods, giving the economy a lift at the start of the fourth
    Retail sales surged 1.7% last month, the Commerce Department
said. Data for September was revised higher to show retail sales
increased 0.8% instead of 0.7% as previously reported. Sales
have now risen for three straight months.
    The data is “continuing to suggest the economy is recovering
quite quickly, and leaning against the Fed’s notion that
inflation may be transitory,” said Gennadiy Goldberg, an
interest rate strategist at TD Securities in New York.
    A separate report showed that production at U.S. factories
rebounded more than expected in October as the drag from
Hurricane Ida faded and motor vehicle output picked up. But
manufacturing continues to be constrained by shortages of raw
materials and labor.
    Yields have jumped since data last Wednesday showed U.S.
consumer prices posted their biggest gain in 31 years in
    Federal Reserve officials, including Chair Jerome Powell,
have maintained that inflation is transitory and likely to
moderate next year.
    St. Louis Federal Reserve Bank President James Bullard said
on Tuesday that the Fed should "tack in a more hawkish
direction" over its next couple of meetings to prepare in case
inflation does not begin to ease.
    Two other Fed officials also said they are vigilant of the
ways that higher inflation can affect U.S. households and dampen
consumer sentiment and want to get it under control.

    Benchmark 10-year note yields gained a basis
point on the day to 1.63% and were up from 1.61% before the
retail sales data was released.
    Breakeven rates on five-year Treasury Inflation-Protected
Securities (TIPS) rose to 3.24%, the highest since
the notes were introduced in 1997, before falling back to 3.19%.
    Bonds had rallied overnight as concerns about a rise in
COVID-19 cases increased demand for the safe-haven debt.
    “Risk sentiment is at risk of worsening into year-end as
COVID-19 cases build. This means a flatter curve, all else being
equal,” analysts at ING said in a note sent on Tuesday.
    Supply may offset some of that demand, however, with
companies selling debt before market liquidity is reduced during
the end-of-year holiday season.
    The Treasury on Wednesday will also sell $23 billion in new
20-year bonds, after seeing very weak demand for a $25 billion
auction of 30-year bonds last week.
    Twenty-year bond yields are trading above those offered on
30-year bonds as the tenor suffers from
relatively lower demand than other maturities.
    Twenty-year bond yields were last at 2.06% while
30-year yields were at 2.02%.
    The Fed is also beginning to reduce the size of its bond
purchase program, which analysts say could push yields higher.
      November 16 Tuesday 3:01PM New York / 2001 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.045        0.0456    0.000
 Six-month bills               0.065        0.0659    0.000
 Two-year note                 99-183/256   0.522     -0.002
 Three-year note               99-162/256   0.8745    0.005
 Five-year note                99-80/256    1.2686    0.012
 Seven-year note               99-8/256     1.5223    0.016
 10-year note                  97-160/256   1.6335    0.012
 20-year bond                  95           2.0594    0.018
 30-year bond                  96-208/256   2.0172    0.010
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        24.75         1.00    
 U.S. 3-year dollar swap        19.75         0.50    
 U.S. 5-year dollar swap        10.25         1.00    
 U.S. 10-year dollar swap        5.00         0.75    
 U.S. 30-year dollar swap      -19.75         0.00    
 spread (Editing by Mark Heinrich and Dan Grebler)