Treasuries Extend Pullback Off Recent Record Highs

(RTTNews) - Treasuries showed a notable move to the downside during trading on Friday, extending the sharp pullback off their recent record highs.

Bond prices moved steadily lower over the course of morning trading before moving roughly sideways in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, advanced by 6.3 basis points to 1.594 percent.

The continued weakness among treasuries came following the release of a report from the Commerce Department showing much stronger than expected retail sales growth in the month of June.

The Commerce Department said retail sales climbed by 0.6 percent in June compared to economist estimates for a 0.1 percent uptick.

While the report also showed a downward revision to May sales growth, the revision was primarily due to lower auto sales, which can be volatile.

Core retail sales, which exclude autos, gasoline, building materials and food service, shot up by 0.5 percent for the second consecutive month after surging up by more than 1.0 percent in April.

ING Chief International Economist Rob Carnell said, "This looks like it could be a bumper quarter for consumer spending, and may lead us to revise our GDP forecasts for 2Q16 higher."

The Federal Reserve also released a report showing that industrial production rebounded by more than anticipated in the month of June.

The report said industrial production climbed by 0.6 percent in June after falling by a revised 0.3 percent in May. Economists had expected production to rise by 0.4 percent.

A separate report from the Labor Department showed that consumer prices rose by slightly less than expected in June.

The Labor Department said its consumer price index rose by 0.2 percent in June after rising by a matching 0.2 percent in May. Economists had expected prices to rise by 0.3 percent.

Core consumer prices, which exclude food and energy prices, also rose by 0.2 percent, matching the increases seen in the two previous months as well as economist estimates.

Meanwhile, bond traders largely shrugged off a report showing a notable deterioration in consumer sentiment in July.

Following the slew of data released this morning, the economic calendar for next week is relatively quiet, although traders are likely to keep an eye on a trio of housing reports.