Rates & Bonds 2 MIN READ

Yields higher on the day after June retail sales growth

July 18, 2023By Reuters

July 18 (Reuters) – US Treasury yields ended the day higher on Tuesday, on news that retail sales grew in June at a slower pace than expected.

The benchmark 10-year note yield rose to 3.799% from around 3.759% before the data’s release. It initially dropped to a three-week low of 3.740% on the data.

The benchmark two-year yield, particularly sensitive to interest rate expectations, initially dropped before rising upon the data’s release, last standing at 4.768%.

The yield curve inversion between two-year and 10-year notes widened to minus 96.9 basis points.

US Census Bureau data showed retail sales rose just 0.2% in June, higher than May’s 0.3% but below analysts’ consensus forecast of 0.5%. This was the third straight monthly increase.

“(We) saw the knee-jerk reaction from the market on lower-than-expected headline retail sales … but then we saw that fade a little bit as the market started to digest some of the broader implications from the data,” said Brandon Swensen, BlueBay fixed income senior portfolio manager at RBC Global Asset Management.

The National Association of Home Builders/Wells Fargo Housing Market Index for July, released on Tuesday, rose to 56 from 55 in June as industry confidence grew.

The Federal Reserve is widely expected to raise interest rates 25 basis points at its July 25-26 meeting. Fed members have indicated the possibility of at least one more rate hike before the year ends, but market expectations are mixed ahead of initial jobless claims figures due on Thursday.

“Until we see clear signs of a weaker labor market, I think you’re going to continue to see a pretty resilient US economy,” Swensen said.

July 18 Tuesday 3:25 p.m. New York / 1927 GMT

  Price Current Yield % Net Change (bps)
Three-month bills 5.2525 5.4127 0.010
Six-month bills 5.255 5.4884 0.000
Two-year note 99-188/256 4.768 0.036
Three-year note 100-104/256 4.3534 0.025
Five-year note 99-240/256 4.0136 0.011
Seven-year note 99-6/256 3.9116 0.010
10-year note 96-140/256 3.799 0.002
30-year bond 95-4/256 3.9093 -0.014


(Reporting by Matt Tracy; Editing by Emma Rumney, Richard Chang, and Jonathan Oatis)


This article originally appeared on reuters.com

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