Updated from 12:17 p.m. ET
Treasuries extended their earlier moves late into today as they generally dropped in value, extending the now four-day slide as the stock markets have been gaining. Key economic data this morning reflected weak
retail sales, falling consumer
spending and rising jobless claims. Today's figures may bolster the view that the
Federal Reserve will continue to ease interest rates, yet the possibility of a rate cut before May 15 remains uncertain.
The 10-year benchmark note was lately down 11/32 to 98 21/32, raising the yield to 5.173%, while the 30-year bond crept up 2/32 to 96 19/32, with the yield dropping to 5.611%.
"The market is pretty much unchanged here," chief technical strategist Michael Krauss at
said. "There is a little sign of weakness, because the market has fallen so much in the last week or so. People are using the data today to sell their longs. The market should be up quite a bit on this data, but this is not a healthy market."
Afternoon commentary by Kansas City Fed President Tom Hoenig included his views that the economy would remain weak in the second quarter, but that the latter half of the year would see accelerating
According to bond trader Maryann Hurley at
, the bond market no longer expects the Fed to make an inter-meeting move, and the weaker-than-expected economic figures are already priced in. "All of the data that we got today was weak, jobless figures, retail and so on," she said. "But I don't think it's going to be enough to make a move inter-meeting."
However, Hurley noted that today's
Producer Price Index figures indicate that inflation isn't a problem and that the Fed won't rush to make future rate cuts. The PPI, an important inflation measure, fell 0.1% in March, but excluding volatile food and energy prices it rose 0.1%. Economists were expecting the headline number to be unchanged and the core rate (excluding food and auto prices) to rise 0.1%.
retail sales report, which measures total sales at retail businesses and is used to predict personal consumption trends, showed a larger-than-expected decline in March sales, which fell 0.2% after zero growth in February. Excluding autos, sales dipped 0.1% compared with February. Economists had been expecting retail sales to remain unchanged in March and to decline 0.1% when excluding auto sales.
University of Michigan's Consumer Sentiment Index
, another key gauge of consumer sentiment watched closely by the Fed, fell to 87.8 in April from 91.5 in March, according to preliminary figures. The index, which measures consumers' confidence levels in the economy, has been falling consistently in the past few months -- it was at 107.6 in November 2000.
And joblessness is on the rise, according to the
initial jobless claims figures, which rose to 392,000. Claims were expected to drop to 381,000 as compared with 383,000 last week. The four-week average rose to 380,500, the highest rate since the week of April 13, 1996.
With consumer activity governing two-thirds of U.S. economic growth, today's figures will surely have an impact on future decisions by
and his crew, as they attempt to stave off an economic recession. But prospects for an early, inter-meeting rate cut have been further dampened by recent gains in the stock market, as investors found some renewed confidence in stocks, particularly in tech.
Lately, the major stock indices were wading in negative territory as the market took in today's weak economic data and a shower of dismal reports by retailers. March was literally a stormy month for most retailers as bad weather took its toll on the group, particularly the apparel sellers. From No. 1 U.S. apparel chain
to women's clothier
, retailers across-the-board posted limp same-store sales for March.
"It takes a little while for weakness in the stock market to impact consumer spending. The Fed is probably on hold off until its main meeting," Hurley told
earlier this morning.