(Adds dropped letter in penultimate paragraph)
By Herbert Lash
NEW YORK, May 14 (Reuters) - Treasury yields slid on Friday
after U.S. retail sales unexpectedly stalled in April as the
boost from government stimulus checks faded and bond investors
heeded the Federal Reserve's view that a jump in inflation will
be temporary.
The yield on benchmark 10-year U.S. Treasury notes
fell 4 basis points to 1.628%.
The unchanged reading in retail sales last month followed a
10.7% surge in March, an upward revision from the previously
reported 9.7% increase, the Commerce Department said.
The jump in the consumer price index on Wednesday put
investors on alert that inflation could rise beyond the Fed's
projections and force the U.S. central bank to boost interest
rates sooner that policymakers have indicated.
The weak retail sales curbed long-term fears of inflation,
despite a solid increase in U.S. import prices in April that
Labor Department data on Friday showed.
"What you're seeing here is the validation of the Fed's
interpretation that any demand side pull in prices will be
temporary because the demand will fall off as the checks wind
down," said Steven Ricchiuto, U.S. chief economist at Mizuho
Securities LLC.
"The bond market, on a very bad inflation number, couldn't
push above the range and probably is not going to be able to,"
he said.
Part of the jump in year-over-year consumer price data
reflected a comparison with weak readings a year ago during the
economic downturn caused by the pandemic.
Fed policy is in a good place at the moment, Cleveland Fed
President Loretta Mester said on Friday, while playing down
economic signals from data that she warned will be volatile as
the economy reopens, Bloomberg News reported.
The yield on the 30-year Treasury bond was down
3.4 basis points to 2.353%.
The breakeven rate on five-year U.S. Treasury
Inflation-Protected Securities (TIPS) was last
unchanged from Thursday's close of 2.648%, near its highest
close in just over a decade.
The 10-year TIPS breakeven rate was last at
2.52%, indicating the market sees inflation averaging 2.5% a
year for the next decade.
May 14 Friday 9:56AM New York / 1356 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 0.0125 0.0127 0.000
Six-month bills 0.03 0.0304 0.000
Two-year note 99-242/256 0.153 -0.006
Three-year note 99-198/256 0.3261 -0.013
Five-year note 99-186/256 0.8064 -0.031
Seven-year note 99-212/256 1.2759 -0.035
10-year note 99-240/256 1.6318 -0.036
20-year bond 94-12/256 2.2499 -0.021
30-year bond 100-112/256 2.3546 -0.032
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 10.00 0.00
spread
U.S. 3-year dollar swap 11.00 -0.25
spread
U.S. 5-year dollar swap 7.75 0.00
spread
U.S. 10-year dollar swap -5.00 0.75
spread
U.S. 30-year dollar swap -33.50 0.75
spread (Reporting by Chuck Mikolajczak; editing by Barbara Lewis)
Read More
