US Treasuries rally on weak retail sales, PPI data

The US Treasuries rallied Friday after data showed that the July retail sales remained flat, despite firmer print was expected, which dampened prospects for a rate increase by the Federal Reserve in the near term. Also, weak producer price drove inventors towards safe-haven buying.

The yield on the benchmark 10-year Treasury note fell 7-1/2 basis points to 1.497 percent, the yield on 5-year note dipped 7-1/2 basis points at 1.076 percent and the yield on short-term 2-year note fell 5-1/2 basis points at 0.694 percent by 12:30 GMT.

The July advance retail sales report revealed an overall unchanged m/m result, below market expectations for a +0.4 percent m/m reading, as compared to the revised +0.8 percent m/m reading that occurred in June (previous +0.6 percent m/m).

Similarly, US producer price index (PPI) final demand for July tumbled -0.4 percent, consensus was for an increase of +0.1 percent, from up 0.5 percent in June. On annual basis, PPI final demand came in negative at -0.2 percent, consensus was for 0.2 percent.

Meanwhile, the S&P 500 Futures trading down 2 points at 2,178 by 12:30 GMT.