Treasuries Fall as U.S. Retail Sales Increase More Than Forecast
By Susanne Walker and Daniel Kruger Nov 14, 2014 9:12 AM ET - Comments
Treasuries fell, led by five-year (USGG5YR) notes, as a report showed retail sales rose more than forecast last month, adding to speculation an improving U.S. economy will position the Federal Reserve to raise interest rates next year.
Yields on five-year securities, more sensitive to Fed monetary policy than longer-term peers, reached the highest level in a week. Benchmark U.S. 10-year yields headed for a weekly increase. The Fed on Nov. 19 will release minutes of its October meeting, when policy makers concluded a bond-purchase stimulus program.
“It does show consumer spending heading into the holidays off to a good start,” said Tyler Tucci, a U.S. government-bond strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, one of 22 primary dealers that trade with the Fed. “That could be a healthy boost to fourth-quarter GDP, which could help the Fed-hike story.”
Five-year note yields advanced four basis points, or 0.04 percentage point, to 1.66 percent at 9:10 a.m. New York time, according to Bloomberg Bond Trader data. They touched 1.67 percent, the highest since Nov. 7.
The benchmark U.S. 10-year note yield increased two basis points to 2.36 percent. It has added seven basis points on the week.
The Fed has maintained its benchmark interest-rate target at virtually zero since 2008 to support the economy.
Retail sales increased 0.3 percent after a 0.3 percent drop in September, the Commerce Department reported today in Washington. The median forecast in a Bloomberg survey of 86 economists projected a 0.2 percent advance. Eleven of 13 major categories showed gains, indicating broad-based growth.
To contact the reporters on this story: Susanne Walker in New York at swalker33@bloomberg.net; Daniel Kruger in New York at dkruger1@bloomberg.net
To contact the editors responsible for this story: Dave Liedtka at dliedtka@bloomberg.net Greg Storey, Paul Cox
