Treasuries Extend Rally On Disappointing Retail Sales Data

(RTTNews) - Extending the strong upward move seen over the past three weeks, treasuries moved notably higher during trading on Wednesday.

Bond prices showed a strong move to the upside in early trading and remained firmly positive throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.3 basis points to 1.837 percent.

The drop on the day extended a recent downward trend by the ten-year yield, which once again fell to its lowest closing level in over a year.

Treasuries benefited from their appeal as a safe haven amid the release of a report from the Commerce Department showing a much steeper than expected drop in U.S. retail sales in the month of December.

The Commerce Department said retail sales slumped by 0.9 percent in December, while economists had expected sales to edge down by just 0.1 percent.

The bigger than expected drop in sales was due in large part to lower gasoline prices, although the report still raised concerns that the U.S. economy could succumb to the slowdown overseas.

The release of the disappointing retail sales data came on the heels of news that the World Bank cut its forecast for global GDP growth in 2015.

In a biannual report, the World Bank said now expects the global economy to grow by 3 percent this year compared to the 3.4 percent increase estimated in June.

The reduced growth forecast was based on weakness in Europe and Japan even as the bank expects strong growth for the U.S. and some developing countries.

The continued strength among treasuries also came amid a continued drop in commodities prices, with the price of copper tumbling to a five-year low.

Trading on Thursday could be impacted by another batch of U.S. economic data, including reports on weekly jobless claims, producer prices, and regional manufacturing activity.