Treasuries Move Notably Higher On Disappointing Data

(RTTNews) - Following the pullback seen in the previous session, treasuries showed a notable move back to the upside during trading on Friday.

Bond prices gave back some ground after seeing initial strength but remained firmly positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.8 basis points to 1.515 percent.

Treasuries benefited from the release of a Commerce Department report showing that U.S. retail sales were unexpectedly flat in the month of July.

The Commerce Department said retail sales were virtually unchanged in July after climbing by an upwardly revised 0.8 percent in June.

Economists had expected sales to rise by 0.4 percent compared to the 0.6 percent increase originally reported for the previous month.

Excluding a jump in auto sales, retail sales fell by 0.3 percent in July after advancing by an upwardly revised 0.9 percent in June. Ex-auto sales had been expected to rise by 0.2 percent.

The Labor Department also released a report showing an unexpected decrease in U.S. producer prices in the month of July.

The report said the producer price index for final demand fell by 0.4 percent in July after climbing by 0.5 percent in June. Economists had expected the index to inch up by 0.1 percent.

Excluding food and energy prices, core producer prices dipped by 0.3 percent in July following a 0.4 percent increase in June. Core prices had been expected to edge up by 0.2 percent.

"With activity being softer than hoped and pipeline inflation pressures looking benign it doesn't offer much support to the view the Fed will be hiking rates imminently," said ING senior economist James Knightley.

A separate report from the University of Michigan showed that consumer sentiment has improved by less than expected in the month of August.

Economic data may continue to attract attention next week, with traders likely to keep a close eye on reports on homebuilder confidence, consumer prices, housing starts, industrial production, and regional manufacturing activity.

The Federal Reserve is also scheduled to release the minutes of its latest monetary policy meeting, which could shed some light on the outlook for interest rates.