NEW YORK: US Treasuries prices slipped on Tuesday after upwardly revised US retail sales data for July and greater risk appetite reduced demand for safe-haven Treasuries, though trading remained thin ahead of a Federal Reserve policy announcement on Thursday.
The Commerce Department said retail sales excluding automobiles, gasoline, building materials and food services increased 0.4 percent in August after an upwardly revised 0.6 percent increase in July. Overall retail sales rose 0.2 percent last month, below an expected 0.3 percent rise, according to a Reuters poll of economists.
"The revisions to July outweigh the small misses in August," said John Briggs, US rates strategist at RBS in Stamford, Connecticut, on the retail sales data.
Analysts said that while the Fed could weigh the retail sales data at this week's meeting, the selling pressure in Treasuries likely did not reflect expectations on whether or not the Fed will hike rates for the first time since 2006 on Thursday. "We are just kind of biding time at the moment until Thursday's Fed decisions," said Kim Rupert, director of fixed income at Action Economics in San Francisco.
After the retail sales data, US interest rates futures implied traders placed a 27 percent chance the Fed would end its near-zero interest rate policy on Thursday, up from 23 percent late Monday, according to CME Group's FedWatch program. Analysts said trading remained thin ahead of the Fed meeting.
They also said strength in equity markets showed greater risk appetite and contributed to the selling pressure on safe-haven Treasuries.
"In a world where we're chopping around ahead of Thursday, it's the revisions and stability in risk assets despite weakness in Chinese shares that are leading to a little weakness in safe-haven US Treasuries," said Briggs of RBS. US 30-year Treasury bonds were last down 29/32 in price to yield 2.99 percent, from a yield of 2.95 percent late Monday. US 30-year yields earlier hit a nearly one-week high of about 3 percent.
Benchmark 10-year Treasury notes were last down 9/32 in price to yield 2.21 percent, from a yield of 2.18 percent late Monday.
Two-year notes were last down 1/32 in price to yield 0.75 percent, from a yield of 0.73 percent late Monday. On Wall Street, the benchmark S&P 500 stock index was last up 0.28 percent.
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