MW: Treasurys rise, shrugging off positive U.S. data
By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — Treasurys largely shrugged off better-than-expected U.S. economic data Thursday, holding onto morning price gains.
Treasury prices rose sharply overnight as a volatile session in Japan sent the Nikkei 225 index JP:NIK -6.35% down 6.4% and weakened the dollar as much to as much as ÂĄ93.76. That helped to increase demand for the haven of the U.S. government debt market.
The 10-year Treasury note 10_YEAR -1.75% yield, which moves inversely to price, fell 3 basis points to 2.20%. The 5-year note 5_YEAR -2.52% yield slipped 2.5 basis points at 1.120% and the 30-year bond 30_YEAR -1.30% yield dropped 3.5 basis points at 3.337%.
Retail sales, driven by gains in the automotive sector, rose at the fastest pace in three months during May. Seasonally adjusted retail sales rose 0.6%, beating the expectations of economists surveyed by MarketWatch, who expected a 0.5% rise.
“From a GDP perspective, the performance in core spending activity provides some assurance that consumer spending will continue to provide an important offset for fiscal austerity this quarter,” said Millan Mulraine, director of U.S. research & strategy at TD Securities, in a note.
Weekly initially jobless claims, a measure of layoffs, fell last week by 12,000 to 334,000, data showed. Economists had expected claims to rise to 350,000.
U.S. stocks edged higher in choppy trade on Thursday.
Global markets have taken a jumpy tone in recent weeks as speculation mounts that the Federal Reserve could begin to slow its pace of bond purchases in coming months. The central bank has put markets on watch that it will make its monetary policy decisions based upon whether data improve, putting markets on watch for signs of economic recovery.
An auction of $13 billion 30-year bonds Thursday will help test the demand for long-duration Treasurys.
Meanwhile, a growing number of market prognosticators are questioning the value of investing in the Treasury market. Most recently, Scott Minerd, global chief investment officer at Guggenheim Partners, called the U.S. government debt market a “Ponzi market”.
Ben Eisen is a MarketWatch reporter based in New York.
