By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices turned up slightly on Wednesday after a pair of U.S. economic reports signalled a slowdown in consumer spending and inflation.
Coming up is the government’s sale of 10-year notes, which some say may be a key indicator of investor demand for Treasury debt, with uncertainty out of Europe and the potential for Federal Reserve easing on the table.
Yields on 10-year notes 10_YEAR -1.32% , which move inversely to prices, fell 3 basis points to 1.64%, after being up slightly before the data. A basis point is one one-hundredth of a percentage point.
Yields on 30-year bonds 30_YEAR -0.54% slipped 2 basis points to 2.75%.
One report said U.S. wholesale prices fell 1% last month, more than some economists forecast and reducing inflation pressures. Read more on producer prices.
Separate data had retail sales slipping 0.2% in May -- the second month in a row and the first time that’s happened in two years. See story on retail sales.
“The disappointing performance in consumer spending will certainly add to the case for more policy accommodation from the Fed, as it may be an indication of some persistence in the economic soft-patch that the recovery has become mired in,” said Millan Mulraine, senior U.S. strategist at TD Securities.
Bonds were under pressure before the data as equities gained some ground and Europe seemed more calm. Analysts also noted pressure coming from a change in Danish pension rules that will mean less need to buy long-term Treasury and German bonds.
The Treasury Department will auction $21 billion in 10-year notes at 1 p.m. Eastern time.
The auction is a reopening, meaning the debt sold will carry the same coupon and maturity date as the originally issued debt, in this case sold in May. See recent Treasury auction results.
On Tuesday, the government garnered weak demand at its sale of 3-year notes. Read about 3-year note auction.
Deborah Levine is a MarketWatch reporter, based in New York.
