Treasuries Move Lower Despite Disappointing Retail Sales Data

(RTTNews) - After ending the previous session slightly lower, treasuries saw some further downside during the trading day on Monday.

Bond prices came under pressure early in the day and remained in negative territory throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.2 basis points to 3.163 percent.

The weakness among treasuries came even though the Commerce Department released a report showing much weaker than expected U.S. retail sales growth in the month of September.

The Commerce Department said retail sales inched up by 0.1 percent in September, matching the uptick seen in August. Economists had expected retail sales to climb by 0.5 percent.

Excluding a rebound in auto sales, retail sales edged down by 0.1 percent in September after rising by a downwardly revised 0.2 percent in August.

Ex-auto sales had been expected to rise by 0.3 percent, matching the increase originally reported for the previous month.

Meanwhile, the report said closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, climbed by 0.5 percent in September after coming in unchanged in August.

"Overall, the current strength of underlying retail spending reflects the continued boost to incomes from the tax cuts enacted at the start of the year," said Andrew Hunter, U.S. Economist at Capital Economics.

He added, "That said, sales growth looks most likely to slow in the fourth quarter as that boost starts to fade, and we still expect a more marked slowdown in real consumption growth over the course of next year."

A separate report released by the Federal Reserve Bank of New York showed the pace of growth in New York manufacturing activity accelerated by more than anticipated in the month of October.

The New York Fed said its general business conditions index rose to 21.1 in October from 19.0 in September, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to inch up to 20.0.

Looking ahead, trading on Tuesday may be impacted by reaction to reports on industrial production and homebuilder confidence.