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LATEST UPDATE:

NO WEEKLY BRIEF NEWSLETTER FOR THE WEEKEND OF OCT. 16-17

TREASURIES-U.S. yields rise with retail sales

·3 min read

(Updates prices) By Rodrigo Campos NEW YORK, Sept 16 (Reuters) - U.S. government bond yields rose on Thursday after a surprisingly strong reading in retail sales lifted some concerns about growth in the world's largest economy. The unexpected rebound in retail sales reported by the Commerce Department, on the back of stronger online purchases, clashes against recent downgrades on estimates for U.S. gross domestic product for the current quarter that have kept downward pressure on yields. The move higher on the 10-year yield, which hit a one-week peak of 1.351% earlier on Thursday, nearly offsets downward moves from earlier in the week, which came after lower inflation readings, and leaves the benchmark yield barely changed since last Friday. "It's a little bit of a realignment of expectations for growth, generally being viewed as a positive sign," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York, adding it is hard to read too much into a sole data point. "We did see a very strong bull flattening of the curve, following the CPI number earlier on this week. You've seen a little bit of a reversal on the back of that," Rajappa said. The yield on 10-year Treasury notes was up 2.9 basis points at 1.333%. The yield on the 30-year Treasury bond was up 1.2 basis points at 1.881%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on 2- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 111.4 basis points, near the midpoint of this week's range. The 5-year to 30-year spread rose to 104.6 bps, on track to close the week at or near its flattest in 13 months. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 0.4 basis points at 0.217%. September 16 Thursday 3:45PM New York / 1945 GMT Price Current Net Yield % Change (bps) Three-month bills 0.04 0.0406 0.000 Six-month bills 0.0475 0.0482 0.000 Two-year note 99-210/256 0.2173 0.004 Three-year note 99-196/256 0.4539 0.016 Five-year note 99-152/256 0.8339 0.034 Seven-year note 99-248/256 1.1297 0.035 10-year note 99-60/256 1.3327 0.029 20-year bond 98-204/256 1.8223 0.017 30-year bond 102-184/256 1.8807 0.012 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 10.75 0.25 spread U.S. 3-year dollar swap 12.25 0.75 spread U.S. 5-year dollar swap 10.25 0.25 spread U.S. 10-year dollar swap 3.50 0.25 spread U.S. 30-year dollar swap -23.50 0.50 spread (Reporting by Rodrigo Campos, additional reporting by Lucia Mutikani; Editing by Steve Orlofsky and Will Dunham) 

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