* U.S. retail sales in April rise unexpectedly
* Yields on 30-year bonds touch highest in more than 6 weeks
* Speculation continues that Fed could be weighing exit
By Luciana Lopez
NEW YORK, May 13 (Reuters) - Prices for U.S. Treasuries fell
on Monday as data showed U.S. consumers unexpectedly increased
their buying last month, suggesting underlying strength in the
world's biggest economy.
The Commerce Department said on Monday retail sales edged up
0.1 percent last month, instead of dropping 0.3 percent as
expected by economists in a Reuters poll.
"This bodes well for the rest of the second quarter," said
Paul Dales, senior U.S. economist at Capital Economics in
As a result, "any slowdown in real consumption in the second
quarter will be modest," he added.
The benchmark 10-year note dropped 7/32 in price
on Monday to yield 1.924 percent, compared with 1.9 percent late
The 30-year bond slipped 20/32 in price to yield
3.129 percent, compared with 3.096 percent late on Friday.
"It's amazing how sentiment has just changed from 'we're
going to a lot lower on yields' to right back to approaching
contacts not too far from the highs of the year in yields,"
Justin Lederer, a Treasury strategist at Cantor Fitzgerald in
A continued climb in the dollar against the yen also helped
erode Treasury prices overnight. The yen slumped further past
100 to the dollar after Group of Seven officials avoided
censuring Japan over the country's massive monetary easing
That stimulus program has led to speculation that Japanese
investors will seek yields elsewhere, seeking out riskier,
higher-yielding assets for their money.
In contrast, U.S. investors are pondering the possibility
that the Federal Reserve could pare back or stop its
asset-buying program as soon as this year.
While the unemployment rate has slipped lower recently, at
7.5 percent the rate still remains a full point off the 6.5
percent Fed policymakers want to see.
Recent economic data have proven mixed, as well, with some
figures supporting a labor market recovery and others painting a
more ambiguous picture.
While a Wall Street Journal article over the weekend fueled
speculation the Fed could be weighing exit strategies, some
analysts were skeptical.
The sell-off in 10-years could be temporary, suggested Priya
Misra, a rates strategist with Bank of America Merrill Lynch in
"We don't expect the Fed to begin reducing the pace of
purchases until they believe that the recovery is more
sustainable and the economy is able to withstand fiscal
tightening," Misra said.
"That would require at least waiting for the summer months
to pass, in our view. Thus, we recommend owning Treasuries,
looking for the 10-year to drift back towards 1.75 percent in
the next month."