Treasuries Turn Lower After Seeing Initial Strength

(RTTNews) - After initially extending the upward move seen over the three previous sessions, treasuries turned lower over the course of the trading day on Friday.

Bond prices pulled back well off their early highs and firmly into negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.1 basis points to 0.640 percent.

The downturn by treasuries came as traders shrugged off the release of some dismal U.S. economic data, including reports showing record decreases in retail sales and industrial production in the month of April.

The Commerce Department said retail sales cratered by 16.4 percent in April after tumbling by a revised 8.3 percent in March.

Economists had expected retail sales to plummet by 12.0 percent compared to the 8.7 percent slump originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales plunged by an even steeper 17.2 percent in April after falling by a revised 4.0 percent in March.

Ex-auto sales were expected to tumble by 8.6 percent compared to the 4.5 percent nosedive originally reported for the previous month.

A separate report from the Federal Reserve showed industrial production plummeted by 11.2 percent in April after tumbling by a revised 4.5 percent in March.

Economists had expected production to plunge by 11.5 percent compared to the 5.4 percent nosedive originally reported for the previous month.

Concerns about the economy may have been offset by a report from the University of Michigan showing an unexpected improvement in consumer sentiment in the month of May.

The report said the consumer sentiment index rose to 73.7 in May after plummeting to 71.8 in April. The rebound surprised economists, who had expected the index to slip to 68.0.

Another report released by the New York Federal Reserve showed regional manufacturing activity continued to deteriorate significantly in the month of May, although the pace of contraction slowed considerably from the previous month.

The New York Fed said its general business conditions index jumped nearly thirty points to a negative 48.5 in May from a negative 78.2 in April.

While a negative reading indicates a continued contraction in regional manufacturing activity, the index came in well above economist estimates for a reading of negative 63.5.

News on the coronavirus front is likely to remain in the spotlight next week, although traders are also likely to keep an eye on reports on homebuilder confidence, housing starts, and existing home sales as well as Congressional testimony by Federal Reserve Chair Jerome Powell.