By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — Treasury prices swung mostly lower but held to a tight range after a round of mildly disappointing data, with investors continuing to look for certainty about how the economic outlook will impact monetary policy.
The benchmark 10-year note 10_YEAR +0.04% yield, which moves inversely to price, rose half a basis point to 2.530%. The 30-year bond 30_YEAR +0.36% yield rose half a basis point to 3.626%, and the 5-year note 5_YEAR -0.16% yield fell a basis point to 1.278%.
The data come as market participants are searching for clarity about when the Federal Reserve will scale back the pace of its $85 billion in monthly bond buys. The central bank surprised markets by holding its purchases steady last month, and a stream of weaker data and fiscal warning signs have pushed back expectations toward next spring.
The Federal Open Market Committee begins its regular policy meeting Tuesday and releases a statement on Wednesday, but few expect any shift in policy in October.
Data on Tuesday were mixed. U.S. home prices rose 1.3% in August, the smallest month gain since March, according to a S&P/Case-Shiller gauge. A rise in mortgage rates and drop in applications played into that slowing growth.
U.S. wholesale prices declined in September, pushing wholesale inflation to its lowest annual rate in four years, data showed Tuesday. The producer price index fell 0.1% on a seasonally adjusted based, against economist expectations of a 0.3% gain. Excluding volatile food and energy categories, core prices met expectations of a 0.1% rise.
Retail sales fell by 0.1% in September, largely due to slowing auto sales, which could be temporary. The reading marked the first drop in six months. Economists polled by MarketWatch were expecting a flat reading.
“Today’s retail sales report is generally consistent with the modest growth consumer spending environment that we are forecasting,” said Joshua Shapiro, chief U.S. economist at MFR, Inc., in a note.
Two more surveys, one on business inventories and one on consumer confidence, are due out at 10 a.m. Eastern.
Also on Tuesday, The Treasury Department will sell $35 billion of 5-year Treasury notes, one piece of a three-part offering of government debt that included 2-year notes Monday and will include $29 billion in 7-year notes 7_YEAR -0.16% Wednesday.
Treasury prices in this intermediate sector of the yield curve have risen in recent weeks as investors push back policy-change expectations, but the auctions are still expected to have a strong showing.
“The recent duration rally has left some under-invested. Investors may need to participate even at richer yields, especially with tapering potentially pushed into 2014,” said analysts at Nomura Securities, in a note.
Ben Eisen is a MarketWatch reporter based in New York.
