Treasuries Pull Back Sharply Following Largely Upbeat Economic Data

(RTTNews) - Treasuries showed a significant move to the downside during trading on Thursday, giving back ground after trending higher over the past several sessions.

Bond prices came under pressure early in the session and remained sharply lower throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 10.6 basis points to 3.926 percent.

The ten-year yield rebounded after closing lower for four consecutive sessions, as a Commerce Department report showing much stronger than expected retail sales growth in July eased concerns about the economic outlook.

The Commerce Department said retail sales jumped by 1.0 percent in July after edging down by a revised 0.2 percent in June.

Economists had expected retail sales to rise by 0.3 percent compared to the unchanged reading originally reported for the previous month.

Excluding a surge in sales by motor vehicle and parts dealers, retail sales still rose by 0.4 percent in July after climbing by 0.8 percent in June. Ex-auto sales were expected to inch up by 0.1 percent.

"The July retail sales report shows that the consumers continue to spend at a solid clip, even if they are more budget-consciences and seeking more bargains," said Nationwide Chief Economist Kathy Bostjancic.

She added, "The resilient consumer spending data tip the scales towards a more cautious 25bps rate cut by the Fed in September."

A Labor Department report showing an unexpected decline by first-time claims for U.S. unemployment benefits in the week ended August 10th also reduced the safe-haven appeal of bonds.

The Labor Department said initial jobless claims fell to 227,000, a decrease of 7,000 from the previous week's revised level of 234,000.

Economists had expected jobless claims to inch up to 235,000 from the 233,000 originally reported for the previous week.

Meanwhile, traders largely shrugged off a report from the Federal Reserve showing industrial production in the U.S. fell by much more than expected in the month of July.

The report said industrial production decreased by 0.6 percent in July after rising by a downwardly revised 0.3 percent in June.

Economists had expected industrial production to dip by 0.3 percent compared to the 0.6 percent increase originally reported for the previous month.

The University of Michigan's preliminary report on consumer sentiment in August may attract attention on Friday, as it includes reading on consumers' inflation expectations.