Treasurys soar on retail report
Government debt rises on slumping same-store sales from Wal-Mart and Target, despite jump in supply, as $10 billion in 30-year notes are set to be auctioned off.
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| Bonds sank despite another $10 billion in debt being auctioned off Thursday. |
NEW YORK (CNNMoney.com) -- Treasury prices surged Thursday, as investors focused on renewed concerns about a slowdown in consumer spending, and a strong multibillion-dollar bond auction.
The benchmark 10-year note jumped 1 7/32 to 100 19/32, and its yield fell to 3.92%. The 30-year long bond spiked 2 7/32 to 97 5/32, with the yield falling to 4.55%.
Bond prices and yields move in opposite directions.
Meanwhile, the 2-year note rose 9/32 to 100 19/32 and yielded 2.43%.
Wal-Mart Stores (WMT, Fortune 500), the world's largest retailer, reported July sales rose 3% at stores open a year or more, within its forecasted range of growth of 2% to 4%, but short of analysts' expectation that sales would grow 3.4%.
Other retailers, such as Target, fared poorly. Target (TGT, Fortune 500) said sales fell 1.2%, in a bigger-than-expected drop. The lackluster sales reflected the end of the impact from the government stimulus checks mailed out earlier this summer.
"The market is reacting to the weak equity market and, above all, the retail news," said Peter Cardillo, chief market economist with Avalon Partners. "That's why the market is higher, despite the anticipation of the long-bond auction."
Bond auction: The U.S. Treasury Department auctioned off $10 billion in 30-year bonds on Thursday afternoon, pushing the long bond over two points.
The government had previously sold off $17 billion in new 10-year notes on Wednesday at a median yield of 4.05%.
Treasurys had fallen in the beginning of the week in anticipation of the auctions.
"Before the auction, the market always reacts to the state of the economy and inflation," said Cardillo. "With inflation remaining high and the economy in a slump, that's why bonds sold off earlier."
Thursday's auction ended the government's August round of financing.
The Treasury's action was a response to the government's anticipated need to borrow $171 billion during the current third quarter, which would mark the second-highest quarterly debt in history. With expensive wars in Afghanistan and Iraq, the Bush administration last week projected the 2009 federal budget deficit will hit a record $482 billion.
The Treasury also offered more than $21 billion in notes and bonds in May. 
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