Treasuries saw some strength during trading on Friday, extending the modest upward move seen in the previous session.
Bond prices moved to the upside early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 1.588 percent.
The strength among treasuries came a Commerce Department report showed U.S. retail sales rose in line with estimates in January, but closely watched core retail sales came in unchanged.
The Commerce Department said retail sales rose by 0.3 percent in January after edging up by a downwardly revised 0.2 percent in December.
Economists had expected retail sales to climb by 0.3 percent, matching the increase originally reported for the previous month.
However, the report said closely watched core retail sales, which exclude autos, gasoline, building materials and food services, were unchanged in January after rising by a downwardly revised 0.2 percent.
Core retail sales were expected to rise by 0.3 percent compared to the 0.5 percent increase originally reported for the previous month.
“After a rare contraction in the fourth quarter, the 3m/3m annualized growth rate of control group sales slipped further to -0.7% in January,” said Andrew Hunter, Senior U.S. Economist at Capital Economics,
He added, “That means there are now clear downside risks to our initial forecast that real consumption growth will rebound back above 2% annualized in the first quarter.”
The Federal Reserve also released a report showing a continued decrease in U.S. industrial production in the month of January, as unseasonably warm weather led to another steep drop in utilities output.
The Fed said industrial production fell by 0.3 percent in January following a revised decrease of 0.4 percent in December. Economists had expected industrial production to dip by 0.2 percent.
Manufacturing output edged down by 0.1 percent in January after inching up by 0.1 percent in December, as Boeing (BA) significantly slowed production of civilian aircraft amid the grounding of its troubled 737 Max.
Meanwhile, the University of Michigan released a report showing an unexpected increase in U.S. consumer sentiment in the month of February.
Preliminary data showed the consumer sentiment index rose to 100.9 percent in February from the final January reading of 99.8. The uptick surprised economists, who had expected the index to edge down to 99.5.
Following the long holiday weekend, next week’s trading may be impacted by reaction to reports on producer prices, housing starts, and existing home sales.
The Federal Reserve is also scheduled to release the minutes of its latest monetary policy meeting, which may shed additional light on the outlook for interest rates.