Treasury yields fall, dollar slips after soft U.S. data

Fri May 15, 2015 5:12pm EDT
 
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By Caroline Valetkevitch

NEW YORK (Reuters) - Treasury yields dropped and the dollar eased on Friday following a stabilization in European government bonds and another batch of weak U.S. data that raised expectations the Federal Reserve will need to wait longer to hike interest rates.

U.S. stocks finished near flat, though the S&P 500 eked out another record closing high and major indexes posted gains for the week. The MSCI World equity index gained 0.26 percent and was up for the week as well.

Data showed U.S. industrial production fell for a fifth straight month in April, in part as oil and gas drilling declined further.

A separate report showing a sharp drop in U.S. consumer confidence in early May also underscored a lackluster economic picture for the United States.

The data follows weak retail sales and producer inflation data this week, suggesting the Fed will probably not raise interest rates anytime soon.

"The market is getting more concerned that the economy weakened through the first quarter into the second quarter, and that pushes the Fed back further and further and people get more comfortable jumping back into Treasuries here," said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York.

European government bonds stabilized, helping market sentiment.

Treasury yields have jumped in the past three weeks, in line with a dramatic sell-off in German government debt, and some investors are taking advantage of the higher yields.   Continued...

 
Traders work on the floor of the New York Stock Exchange May 15, 2015.   REUTERS/Brendan McDermid