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TREASURIES-Yields drop after retail sales unexpectedly fall
July 14, 2015 / 1:24 PM / 2 years ago

TREASURIES-Yields drop after retail sales unexpectedly fall

* Retail sales drop sparks bond buying
    * Yellen testimony on Wednesday in focus

    By Karen Brettell
    NEW YORK, July 14 (Reuters) - U.S. Treasury yields fell on
Tuesday after data showed that U.S. retail sales unexpectedly
fell in June, adding to speculation that tepid economic data may
push back when the Federal Reserve is likely to begin raising
interest rates.
    The Commerce Department said retail sales slipped 0.3
percent last month, the weakest reading since February. May's
retail sales were revised down to show them rising 1.0 percent
instead of the previously reported 1.2 percent jump.
 
    The data will increase focus on Fed chair Janet Yellen's
Humphrey-Hawkins testimony to Congress on Wednesday and
Thursday. Yields had gained after Yellen gave a hawkish speech
on Friday and said she expects a rate hike at some point this
year. 
    "It certainly doesn't help the cause. Everyone seemed to get
a bit more bearish after Yellen made her comments on Friday,
people are anticipating kind of the same tone going into
tomorrow," said Tom Tucci, head of Treasuries trading at CIBC in
New York.
    Benchmark 10-year notes were last up 13/32 in
price to yield 2.40 percent, down from around 2.43 percent
before the data was released. The yields have held in a range
between 2.18 percent and 2.50 percent since the beginning of
June.
    Treasury prices also gained as lawmakers from Greece's
ruling Syriza party and their allies were arguing behind closed
doors about whether to back sweeping reforms the government must
ram through parliament as it races to meet the terms of an
unpopular bailout deal.
    Having staved off financial meltdown with a new agreement
from Greece's creditors, Prime Minister Alexis Tsipras has less
than 48 hours to smother dissent from hardliners and pass
measures tougher than those rejected in a referendum days ago.
 
    U.S. producer price data on Wednesday and consumer price
data on Friday will also be in focus for signs on whether
inflation is rising to Fed's targets.

 (Editing by Meredith Mazzilli)

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