Treasury yields tumble after weaker-than-expected retail sales, inflation

  • Treasury yields tumble after weaker-than-expected retail sales, inflation

Treasury yields tumble after weaker-than-expected retail sales, inflation

The dollar weakened and government bond yields fell to multi-week lows on Friday after a benign reading of U.S. inflation in June and soft retail demand raised doubts the Federal Reserve would increase interest rates later this year. If the greenback extends fall, 1.16 is possibly seen as its next support level.

The Australian dollar hit a near 15-month high as risk appetite was robust with global stock markets hitting record highs and after dovish comments from global policymakers.

The New Zealand dollar held onto its overnight gains but was headed for a 0.8 percent weekly decline as investors await several U.S. economic indicators, including inflation numbers. Electricity costs slid 0.6 percent.

Annualized consumer price inflation (CPI) unexpectedly eased in June, while the core CPI repeated its prior reading, official data showed on Friday. The Nasdaq composite added 0.2 percent to 6,274.44.

The benign inflation rate "could cast doubts on the Federal Reserve's ability to increase interest rates for a third time this year", CNBC said. Market participants said the lack of spending from US shoppers made it hard to envision inflation approaching the Fed's 2% target.

The greenback hit a 2-day low of 1.2692 versus the loonie and a 15-month low of 0.7826 versus the aussie, off its early highs of 1.2747 and 0.7726, respectively.

Consumer prices in the United States came in unchanged in the month of June, according to a report released by the Labor Department on Friday. The two-year note fell to 1.347% from 1.363% at yesterday's close, and the 30-year fell to 2.892%.

European shares had their strongest week in more than two months as investors piled back into equities on signs that the world's major central banks would likely not tighten monetary policy as quickly as some had feared.

Positive retail sales numbers will provide further evidence that the U.S economy saw a pickup in pace at the end of the 2 quarter, with momentum expect0ed to carry through the 3, despite the U.S administration's continued failure in delivering on growth policies.

The report said the producer price index for final demand inched up by 0.1% in June after coming in flat in May. The 10-year German Bund ticked up nearly one basis point to yield 0.525 per cent.

Investors zeroed in Federal Reserve Chair Janet Yellen telling lawmakers this week that interest rates would likely peak at a low level as the central bank continues to tighten monetary policy. It was poised for a weekly gain of 1.3 percent, the biggest since mid-May.

The greenback reversed from an early more than a 2-week high of 0.9701 against the Swiss franc, edging down to 0.9635.

For the week, silver is on track for a gain of around 1.5%.

The US dollar remained broadly on the back foot against major currencies. Brent crude, used to price worldwide oils, was flat at $48.42 per barrel in London.

OIL: Benchmark U.S. crude gained 7 cents to $46.15 per barrel in electronic trading on New York Mercantile Exchange.