Treasuries Close Roughly Flat After Seeing Early Weakness

After moving notably higher over the course of the two previous sessions, treasuries finished Friday’s trading roughly flat.

Bond prices moved to the downside early in the session but recovered to end the day nearly unchanged. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.300 percent.

The initial weakness among treasuries came after the Commerce Department released a report showing an unexpected increase in retail sales in the month of June.

The Commerce Department said retail sales climbed by 0.6 percent in June after plunging by a revised 1.7 percent in May.

The rebound surprised economists, who had expected retail sales to fall by 0.4 percent compared to the 1.3 percent slump originally reported for the previous month.

Excluding a steep drop in sales by motor vehicle and parts dealers, retail sales jumped by an even stronger 1.3 percent in June following a revised 0.9 percent decrease in May.

Economists had been expecting ex-auto sales to increase by 0.4 percent compared to the 0.7 percent drop originally reported for the previous month.

However, treasuries regained ground after a separate report from the University of Michigan showed an unexpected slump in consumer sentiment amid concerns about inflation.

The report showed the consumer sentiment index slid to 80.8 in July from 85.5 in June. The decrease surprised economists, who had expected the index to inch up to 86.5.

“Rather than job creation, halting and reversing an accelerating inflation rate has now become a top concern,” said Surveys of Consumers chief economist Richard Curtin, noting that inflation has put added pressure on living standards and caused postponement of large discretionary purchases.

Following the slew of U.S. economic data released over the past few days, the economic calendar for next week is relatively light, although traders are still likely to keep an eye on reports on homebuilder confidence, housing starts and existing home sales.

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