Treasury Bond Prices Close Weaker

Bonds fell after January retail sales came out stronger than expected. The market recovered in later trading but remained down on the day.

MARKETSCOPE : Treasury bond prices fell Tuesday, after news of stronger than expected January retail sales.

The 10-year note fell 09/32 to 99-03/32 for a yield of 4.61%, while the 30-year bond sank 21/32 to 98-14/32 for a yield of 4.60%. Prices were recovering in later trading, but had not completely made up for their plunge earlier in the day.

News hit that U.S. retail sales rose 2.3%, more than the 0.9% expected, after gaining only 0.4% in December.

"The consumer started the new year with a bang, probably aided by a very mild January and increased use of gift cards, which would push sales from December into January," said John Ryding, an analyst at Bear Stearns in New York. "Nevertheless, this report points to a very strong consumer spending increase." He says he's "very comfortable" with his firm's forecast of 5% real Gross Domestic Product growth in the first quarter.

In other news Tuesday, U.S. Business Inventories climbed 0.7% in December. They increased 0.6% in November, which was revised from 0.5%.

The National Federation of Independent Business Index of Small Business Optimism edged down 0.3 of a point to 101.1 in January. It said 17% of small employers plan to increase employment in the next three months.

The new Federal Reserve Chairman Ben Bernanke gives testimony in the coming days. Under former chairman Alan Greenspan's leadership, the Federal Open Market Committee has raised rates 13 times since 2004, in an effort to control inflation by making debt more expensive.

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