* Treasuries reverse gains made in week as stocks, oil recover
* January retail sales data stronger than expected
* Fed’s Dudley says it’s “premature” to talk about negative rates (New throughout, updates prices and market activity, adds comments)
By Tariro Mzezewa
NEW YORK, Feb 12 (Reuters) - U.S. Treasury yields climbed on Friday as stocks rallied after a report showed that U.S. consumer spending regained momentum in January, suggesting the economy may not be slowing as much as many investors had feared in recent weeks.
The U.S. government debt market came off a streak of gains linked to safe-haven demand driven by investor concerns about slowing global growth and growing skepticism about the Federal Reserve’s ability to raise interest rates again this year.
The Commerce Department said retail sales excluding automobiles, gasoline, building materials and food services increased 0.6 percent last month after an unrevised 0.3 percent decline in December.
“The upbeat retail numbers provided a rebound and the fear-trade we saw all week seems to have moved on for now,” said Kathy Jones, chief fixed income strategist at Charles Schwab & Co. in New York.
Other economic data showed import prices fell for a seventh consecutive month, driven by the dropping price of petroleum products.
Adding to pressure on Treasuries were comments from New York Fed President William Dudley, who said the U.S. economy has “quite a bit of momentum,” making it “extraordinarily premature” to even talk about the possibility of using negative rates.
Dudley “did sound somewhat more upbeat than one would expect given recent volatility, but his confidence was probably buoyed by a strong retail sales print,” said Gennadiy Goldberg, interest rate strategist at TD Securities in New York.
Investors put some funds back into risky assets. Stocks gained and oil prices surged as much as 12 percent.
Still, investors are not worried about inflation, which should keep Treasury yields relatively low.
“The outlook for inflation remains benign, yields will be lower for longer and there will be setbacks like today, but in general we’ve got slow growth and disinflationary pressure,” said Jones.
The benchmark 10-year note was last down 27/32 in price to yield 1.737 percent, up from 1.644 percent late on Thursday.
The 30-year bond was last down 1-13/32 in price to yield 2.588 percent, up from 2.520 percent on Thursday.
On Wall Street, the benchmark S&P 500 stock index was up 1.68 percent. (Reporting by Tariro Mzezewa; Editing by Meredith Mazzilli)