US TSY MKT BRIEFLY BID AFTER DATA BUT GAINS SOLD
09:48 EDT 07/14
NEW YORK (MktNews) - U.S. Treasuries briefly upticked Wednesday morning following release of mostly favorable June producer price index, but pressure in core and intermediate prices sparked later selling.
The core PPI fell 0.2% in June, below expectations of a 0.1% increase, while the overall rate fell 0.1% vs. expectations of a 0.1% increase. Analysts said the dip in PPI was due to the declines in energy, down 0.3%, and cars, down 1.3%.
But a second month of price hikes in raw materials and intermediates took the shine off the report, dealers said. Both core crude materials and core intermediate materials rose 0.5%.
U.S. retail sales rose a less-than-expected 0.1% in June vs. expectations of a 0.3% rise, while the non-auto component rose an as-expected 0.4%.
However, there were upward revisions to ex-auto sales for April-May, which is negative for bonds. The ex-auto average for the quarter posted a gain of nearly 2% over the first-quarter, showing strong consumer demand.
Although many analysts considered the data friendly, some dealers said the market reaction was poor and players seem tired. Sources said there was more interest in selling and many view the market as overbought.
Ian Sheperdson, chief U.S. economist at High Frequency Economics, noted the June PPI and retail sales data will be superseded by July data. Therefore, the June data may not be as instrumental for the Fed to consider.
In debt futures, one New York dealer sold up to a total of 10,000 Sep T-bond contracts, which has kept the market under pressure, according to sources.
GovPX posted volume of $17.3 billion at 9:32 a.m. EDT.
The yield on the 30-year bond was 5.922% at 9:32 a.m. EDT compared with 5.920% at 8:12 a.m. EDT. -- Jill Bebar; New York newsroom; 212-509-9297, jill@marketnews.com. |
