Treasuries Move To The Downside Following Inflation, Retail Sales Data

(RTTNews) - Treasuries showed a lack of direction early in the session on Thursday but moved to the downside over the course of the trading day.

Bond prices ended the day firmly in the red after spending early trading bouncing back and forth across the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.9 basis points at 4.288 percent.

The lower close by treasuries came following the release of a Labor Department report showing producer prices in the U.S. increased by more than expected in month of August.

The Labor Department said its producer price index for final demand advanced by 0.7 percent in August after climbing by an upwardly revised 0.4 percent in July.

Economists had expected producer prices to rise by 0.4 percent compared to the 0.3 percent increase originally reported for the previous month.

The report also said the annual rate of producer price growth doubled to 1.6 percent in August from 0.8 percent in July. The annual rate of growth was expected to accelerate to 1.2 percent.

A separate report from the Commerce Department showing retail sales in the U.S. increased by much more than expected in the month of August also reduced the appeal of bonds.

The Commerce Department said retail sales climbed by 0.6 percent in August after rising by a downwardly revised 0.5 percent in July.

Economists had expected retail sales to inch up by 0.2 percent compared to the 0.7 percent increase originally reported for the previous month.

The bigger than expected increase in retail sales was largely due to higher gas prices, however, as sales rose by just 0.2 percent excluding sales by gas stations.

Another batch of U.S. economic data may impact trading on Friday, with traders likely to keep an eye on reports on import and export prices, industrial production and consumer sentiment.