US Treasuries jump as rate uncertainties linger

US Treasury prices ended higher on Tuesday after soft August retail sales and a record high current account deficit kept dealers focused on the possibility of a slower pace of official interest rate hikes.
Bonds were also buoyed by higher crude oil futures prices as Hurricane Ivan moved closer to US oil and natural gas production facilities in the Gulf of Mexico.
The retail sales report left economists looking for third-quarter private consumption growth of 3.0 percent to 3.5 percent - up from 1.6 percent in the second quarter, but consistent with an economy not firing on all cylinders.
"Our measure of core sales, which excludes autos, gas and food, rose a pitiful 0.1 percent, the worst performance since April and impossible to square with Mr Greenspan's assertion last week that the economy is regaining traction," said Ian Shepherdson, chief US economist at High Frequency Economics.
Futures prices indicate the Fed will skip a rate increase in November or December after almost certainly raising target rates by a quarter-percentage point at its September 21 meeting.
"We suspect that if the economy remains as soft as it has been lately, the Fed may very well decide a break is in order somewhere along the way," said Chris Low, chief economist at FTN Financial.
Bond yields, which move inversely to prices, remain within sight of five-month lows as the US economic recovery stumbles through a slow patch.
The 10-year note rose 4/32 in price for a yield of 4.12 percent, down from 4.14 percent on Monday. The benchmark yield fell below resistance at 4.13 percent in late trading. The next target is 4.08 percent to 4.09 percent.
The 30-year bond rose 2/32 to yield 4.93 percent, unchanged from Monday. Five-year notes were up 4/32 to yield 3.33 percent from 3.36 percent, and two-year notes were up 2/32 at a yield of 2.44 percent.
US retail sales fell by a greater-than-expected 0.3 percent in August, the biggest monthly decline since April, although excluding auto sales, they were in line with forecasts for a 0.2 percent gain.