Bloomberg News

Treasuries Rise After Retail Sales Increase Less Than Forecast

January 12, 2012

Jan. 12 (Bloomberg) -- Treasuries rose as a report showed U.S. retail sales increased at a slower-than-expected rate last month, increasing concern the economic recovery is stalling and bolstering demand for government debt.

Benchmark 30-year bonds dropped earlier as the government prepares to sell $13 billion of the debt in the final of three auctions this week totaling $66 billion, and as Spain and Italy sold debt a lower borrowing cost. A separate report showed U.S. initial jobless claims rose last week, after falling the previous week.

“The numbers disappoint,” said Steven Ricchiuto, chief economist in New York at Mizuho Securities USA. “The Treasury market is saying we may be getting a better situation from overseas, but we’re not out of the woods here yet. So there’s no reason to be selling Treasuries.”

Yields on 30-year bonds dropped two basis points, or 0.02 percentage point, to 2.95 percent at 9:03 a.m. in New York, according to Bloomberg Bond Trader prices. The 3.25 percent security due in November 2041 rose 9/32, or $2.81 per $1,000 face amount, to 103 15/32. The yield on the 10-year note fell one basis point to 1.90 percent.

Sales at U.S. retailers in December rose 0.1 percent, restrained by cheaper fuel prices and holiday discounting that helped hold down the value of goods sold. The gain followed a 0.4 percent advance in November that was more than initially reported, Commerce Department figures showed today. Economists forecast a 0.3 percent December rise, according to the median estimate in a Bloomberg News survey. Purchases excluding automobiles fell 0.2 percent.

Jobless claims climbed by 24,000 to 399,000 in the week ended Jan. 7, Labor Department figures showed today in Washington. The median forecast of 46 economists in a Bloomberg News survey projected 375,000. The number of people on unemployment benefit rolls rose, while those receiving extended payments decreased.

--Editors: Kenneth Pringle, Dave Liedtka

To contact the reporter on this story: Susanne Walker in New York at swalker33@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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