Bond Report: Treasury yields inch lower ahead of retail sales, industrial production

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U.S. Treasury yields fell on Friday ahead of retail sales and industrial production numbers that could give clues about the U.S. economy’s health. Investors also eyed the spread of COVID-19, the viral outbreak that originated in Wuhan, China.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -1.79% fell 2.5 basis points to 1.592%, while the 2-year note yield TMUBMUSD02Y, -1.39% was down 1.6 basis points to 1.426%. The 30-year bond yield TMUBMUSD30Y, -1.90% slipped 3.5 basis points to 2.043%.

What’s driving Treasurys?

Investors will handle key economic data that could furnish additional clues on whether the manufacturing sector is strengthening on the back of the phase one U.S.-China trade deal. A snapshot of the consumer could also give an indication whether their spending will continue to power U.S. growth, despite global economic headwinds.

Along with last month import price data, January retail sales will be released at 8:30 a.m. ET, and are expected to climb 0.3%. Soon after, January industrial production data will be out at 9:15 a.m., with economists polled by MarketWatch anticipating an decline of 0.3%. To cap off the morning rush of data, consumer sentiment gauge for February and December business inventories will be out at 10 a.m.

On Friday, China reported another sharp increase in the number of people infected with COVID-19. The National Health Commission reported 121 more people had died and there were 5,090 new confirmed cases. This comes after Chinese health officials said they had tweaked the methodology of identifying coronavirus cases.

On the monetary policy front, New York Fed President John Williams said Thursday night that the central bank’s rate cuts had positioned the economy for continued growth.

What did market participants’ say?

“Today in the U.S. we get readings on retail sales and consumer confidence. The data out of Europe continues to be weak. Still, like 2019, all about the U.S. consumer,” wrote Gregory Faranello, head of U.S. rates at AmeriVet Securities.

“The ongoing concern with the coronavirus continues. And the reality is, we need more time to see the impact from an economic perspective. It is very difficult day to day to ascertain precisely where things are at. And it lends itself to some of the choppy price action we are getting across both equities and rates,” he said.

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