10-year Treasury yield rises slightly after retail sales top expectations
Long-maturity Treasury yields were slightly higher on Friday after the big beat on retail sales for September.
The yield on the benchmark 10-year Treasury note gained marginally to 0.733%. The 30-year rate also rose slightly to 1.524%. Yields move inversely to prices.
Consumers spent at a much faster pace than expected in September, with retail sales rising 1.9%. Economists surveyed by Dow Jones expected sales to rise 0.7%, up from a 0.6% rise in August.
Excluding autos, the gain was 1.5%, ahead of the 0.4% expectation. Clothing and accessories led the gains while electronics was the only negative sector.
Dollar set for best week in three weeks on stimulus uncertainty, virus concerns
The dollar edged lower against a basket of currencies on Friday, paring some of the week’s gains built on increased caution over a global surge in coronavirus cases and fading prospects for a U.S. stimulus package before the Nov. 3 election.
The greenback pared some of the day’s losses after strong U.S. retail sales data helped assuage concerns about the health of the U.S. consumer.
The U.S. dollar index was 0.1% lower at 93.676. The index is up 0.7%, for the week, its best weekly gain in three weeks.
U.S. relief plans remain bogged down in a three-way negotiation between the White House, Senate Republicans and House Democrats.
The U.S. budget deficit hit a record $3.132 trillion during fiscal 2020, more than triple the 2019 shortfall, as a result of massive coronavirus rescue spending, the U.S. Treasury said on Friday.
“The unexpectedly strong 1.9% rise in retail sales last month suggests the economy was carrying more momentum into the fourth quarter than anticipated, defying fears that the expiry of enhanced unemployment benefits in the summer would harm the economy,” Michael Pearce, a senior U.S. economist at Capital Economics, said in a note.
“But with new coronavirus infections on the rise, we are not rushing to revise up our forecast that GDP growth will slow to 4% annualised in the fourth quarter,” he said.
Sterling, erased the bulk of its early gains to trade slightly higher on the day in a choppy session on Friday, after British Prime Minister Boris Johnson told businesses to get ready for a no-deal Brexit.
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