Treasuries Move Higher On Coronavirus Concerns, Disappointing Retail Sales Data

(RTTNews) - After ending the previous session modestly lower, treasuries moved back to the upside during the trading day on Tuesday.

Bond prices moved higher early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.4 basis points to 0.872 percent.

Treasuries benefited from their appeal as a safe haven amid concerns about a continued spike in new coronavirus vases.

Data from John Hopkins University showed more than 166,000 news coronavirus cases on Monday, with the total number of cases in the U.S. now exceeding 11 million.

The strength among treasuries also came after a report from the Commerce Department showed retail sales rose by less than expected in the month of October.

The report said retail sales rose by 0.3 percent in October after jumping by a downwardly revised 1.6 percent in September.

Economists had expected retail sales to climb by 0.5 percent compared to the 1.9 percent spike originally reported for the previous month.

Excluding an increase in sales by motor vehicle and parts dealers, retail sales edged up by 0.2 percent in October after surging up by 1.2 percent in September. Ex-auto sales were expected to increase by 0.6 percent.

Gregory Daco, Chief U.S. Economist at Oxford Economics noted retail sales are 4.9 percent above their pre-Covid levels but called the near-term outlook "concerning."

"While phase one of the recovery proved that fiscally supported incomes can be potent drivers of spending on goods, we should not fall for alluring rearview mirror economics," Daco said.

He added, "Phase two of the recovery is significantly slower with muted employment gains and reduced fiscal aid weighing on incomes, and a worsening Covid outbreak once again limiting activity across the country."

Meanwhile, the Federal Reserve released a separate report showing a significant rebound in U.S. industrial production in the month of October.

The Fed said industrial production jumped by 1.1 percent in October after falling by a revised 0.4 percent in September.

Economists had expected production to surge up by 1.0 percent compared to the 0.6 percent drop originally reported for the previous month.

The National Association of Home Builders also released a report showing U.S. homebuilder confidence improved to another new record high in November.

Following the slew of U.S. economic data released this morning, the Commerce Department is scheduled to release its report on new residential construction in the month of October on Wednesday.