November 15, 2019 / 7:19 PM / a month ago

TREASURIES-Yields rise on fresh hopes of trade deal

 (Adds industrial production data, updates prices)
    * Kudlow talks up trade talks
    * Retail sales data disappoints

    By Karen Brettell
    NEW YORK, Nov 15 (Reuters) - U.S. Treasury yields rose on
Friday as fresh hopes that the United States and China will
reach a deal to de-escalate their trade war boosted risk
appetite, and reduced demand for U.S. government bonds.
    Yield gains were pared, however, after retail sales data for
October failed to meet expectations and raised concerns about a
soft holiday shopping season. 
    The United States and China are getting close to a trade
agreement, White House economic adviser Larry Kudlow said on
Thursday, citing what he called very constructive talks with
Beijing about ending a 16-month trade war.             
    The comments come after several media reports indicated that
negotiators are struggling to reach a deal.
    The Financial Times reported on Thursday that the countries
are having a hard time agreeing on issues including intellectual
property, agricultural purchases and tariffs.
    “Overnight, there were some positive trade headlines so you
had rates under a little bit of pressure, giving back some of
the gains this week,” said Justin Lederer, an interest rate
strategist at Cantor Fitzgerald in New York.
    Benchmark 10-year notes             dropped 4/32 in price to
yield 1.833%, up from 1.815% late Thursday.
    Bonds prices have gained this week as optimism over a trade
deal ebbed, retracing some of last week's dramatic selloff.
    Ten-year note yields             rose to 1.973% on Nov. 7,
which was the highest since Aug. 1, and have climbed from 1.670%
on Nov. 1.
    Data on Friday showed that U.S. retail sales rebounded in
October, but consumers cut back on purchases of big-ticket
household items and clothing, which could temper expectations
for a strong holiday shopping season.             
    The data was “all in all a little weaker than expected,”
Lederer said.
    Other data also showed that U.S. industrial production fell
faster than expected in October as output for the manufacturing,
mining and utilities sectors fell.             

 (Editing by Nick Zieminski and Steve Orlofsky)
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