U.S. Treasury yields dropped on Friday as investors assessed the state of the economy after a slew of reports this week.
The 10-year Treasury yield was more than 4.5 basis points lower at 4.478%, while the 2-year Treasury yield was more than 5 basis points down at 4.263%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Data released Friday showed retail sales slipped 0.9% in January from an upwardly revised 0.7% gain in December, which came out worse than the Dow Jones estimate for a 0.2% decline.
“While January’s report was weak, some of that weakness was offset by the fact that December’s report was revised higher. Overall, though, the report throws some cold water on the idea of an overheating economy, and treasury yields declined back below 4.5% in response as stocks rebounded off their pre-market lows,” wrote strategists at Bespoke Investment Group.
Thursday’s producer price index, which measures wholesale prices, came in hotter than expected in January, rising 3.5% for the year, the Bureau of Labor Statistics reported. Wholesale prices rose 0.4% on the month, higher than the Dow Jones forecast of 0.3%. Wednesday’s consumer price index report also came in above forecast.
Some aspects of the PPI report and the CPI report suggested a softer reading for the personal consumption expenditures price index, the Fed’s preferred inflation gauge, which will be published later in the month.
Meanwhile, U.S. President Donald Trump signed an executive order for reciprocal tariffs on foreign nations, saying the plan will treat other countries’ nontariff policies as unfair trade practices that call for retaliatory tariffs. However, investors’ worries were eased as Trump held off from implementing levies immediately.
