NEW YORK: US Treasury prices pulled up from overnight lows on Thursday as weaker-than-expected U.S. retail sales and weekly jobless claims reports inserted some caution into the economic backdrop and forecasting of U.S. monetary policy.
The data, which showed U.S. consumer spending barely rebounded in January suggests economic growth was slow in the first quarter, and caused a knee-jerk reaction to buy.
The number of American's filing for first-time jobless claims rose more than expected last week, however the underlying trend remains consistent with a strengthening labor market. .
Investors, seeing a potential de-escalation in the conflict between Ukraine and Russian-backed separatists in the wee hours of Thursday with a new cease-fire agreement, had trimmed their positions in safe-haven U.S. Treasuries.
"The overnight news on the ceasefire was positive on the geopolitical front, and Treasuries sold off. However, the data this morning on retail sales and jobless claims turned it around. Nothing more complicated than that," said Michael Pond, global head of inflation market strategy at Barclays in New York.
Just ahead of the retail sales and jobless claims reports the benchmark 10-year U.S. Treasury was down close to half a point in price, keeping the yield above the 2 percent mark.
However, in the wake of the data, the 10-year Treasury is now off just 3/32 of a point in price, with the yield at 1.99 percent.
The 30-year bond cut its loss of one full point in price to trade in early New York action with a loss of 10/32 of a point, leaving the yield at 2.57 percent.
An upcoming auction of $16 billion worth of 30-year Treasuries on Thursday was seen weighing down current market prices.
"Definitely, I think that's why we are seeing some of the underperformance today on the 30-year, but after the auction I think we go back to very good performance," said Justin Hoogendoorn, fixed income strategist at BMO Capital Markets in Chicago. "I would have to expect a pretty decent auction, despite the levels and it has not been a problem finding buyers at the long-end of the curve."
"Our economists continue to be optimistic about the U.S. economy, but there is a lot of risk to the downside because of the global picture," he said.
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