Treasury prices fall after retail sales surprise

AP News
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Posted: Jun 14, 2011 5:30 PM
Treasury prices fall after retail sales surprise

Better than expected retail sales pushed government bond prices lower Tuesday.

The government said retail sales fell 0.2 percent last month, with most of the drop-offs in the automotive sector. But the decline was less than economists had expected and a sign that the economy's recent stall may be short-lived. The government also reported that wholesale prices rose in May by the smallest amount in 10 months, which helped dispel concerns that rising food and energy costs would slow the economic recovery.

The news reversed a two-week long slump in the stock market and pulled the prices of government bonds lower as traders put less value on low-risk assets. The price of the 10-year Treasury note fell 96 cents for every $100 invested. The dip in price pushed the yield up to 3.10 percent from 2.99 percent Monday.

In other trading, the 30-year bond slipped $1.21 for every $100 invested. Its yield rose to 4.30 percent from 4.20 percent. The yield on the two-year note rose to 0.44 percent from 0.40 percent. Bond prices fall when their yields rise.

The three-month Treasury bill paid a yield of 0.04 percent, at a discount of 0.05 percent.