NEW YORK- Treasury yields climbed further on Tuesday after data showed the US economy was holding up despite higher interest rates, a reminder that Federal Reserve efforts to cool inflation by slowing growth still has a ways to go.
Government bond yields, which move inversely to their price, declined overnight on the back of lower-than-anticipated economic data overseas, with China’s industrial output in April missing expectations by a large margin.
But yields changed direction after US economic data showed resilient consumer consumption as well as better-than-expected industrial output.
US retail sales increased less than expected in April, rising 0.4 percent against forecasts of a 0.8 percent increase, but the underlying trend was solid. Production at US factories, meanwhile, surged last month to beat forecasts.
Separately, US homebuilder sentiment rose to a 10-month high in May as tight housing supply boosted demand for new construction, according to a survey on Tuesday.
“Relative to the last couple months retail sales held up decent in April,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management. “Overall, the economic data trend has been coming in better than feared.”
Treasury yields rose roughly four basis points after the retail sales release as the data reinforced the belief that the Fed will keep rates higher for longer to bring down inflation, though an slowdown later this year remains priced in. – Reuters
