By Karen Brettell and David Randall NEW YORK, Aug 15 (Reuters) - Benchmark 10-year U.S. Treasury yields hit an almost 10-month high on Tuesday before quickly dipping, after data showed July retail sales rose more than expected. Retail sales jumped 0.7% last month, above the 0.4% forecast. June data was revised higher to show sales rising 0.3% instead of the previously reported 0.2%. Americans boosted online purchases and dined out more, suggesting the U.S. economy continues to expand and putting recession fears at bay. Resilient U.S. data has also boosted expectations that the Federal Reserve may hold rates higher for longer to bring inflation down closer to its 2% annual target. Markets have priced in "a considerably higher probability that we stay around the current terminal rate for a longer period than was previously expected," said Jonathan Cohn, head of U.S. rates desk strategy at Nomura in New York. Benchmark 10-year yields hit 4.274%, the highest since Oct. 24, before falling to 4.197% in early afternoon trading. Two-year yields reached 5.024%, the highest since July 7, before retreating to 4.940%. The interest rate-sensitive notes are holding below the 5.120% yield reached on July 6, the highest since June 2007. The inversion in the closely watched yield curve between two- and 10-year notes narrowed to minus 75 basis points. The Fed will release minutes from its July 25-26 meeting on Wednesday. The Federal Reserve Bank of Kansas City's annual symposium in Jackson Hole, Wyoming, on Aug. 24-26 could also deliver clarity on Fed thinking. Futures markets are now pricing in a nearly 35% chance that the Fed's benchmark rate will be above its current range at its December meeting, up from a roughly 25% chance seen a month ago. The market is evaluating "how far the sell-off can run" before the Fed releases minutes of its previous meeting Thursday afternoon, said Benjamin Jeffery, U.S. rates strategy at BMO Capital Markets. August 15 Tuesday 1:32PM New York / 1732 GMT Price Current Net Yield % Change (bps) Three-month bills 5.29 5.4519 0.010 Six-month bills 5.2825 5.5179 -0.016 Two-year note 99-166/256 4.9395 -0.026 Three-year note 99-74/256 4.6317 -0.011 Five-year note 98-254/256 4.3528 -0.002 Seven-year note 98-60/256 4.296 0.008 10-year note 97-104/256 4.1953 0.013 20-year bond 92-28/256 4.4809 0.022 30-year bond 97-4/256 4.3031 0.022 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 0.00 0.00 spread U.S. 3-year dollar swap 0.00 0.00 spread U.S. 5-year dollar swap 0.00 0.00 spread U.S. 10-year dollar swap 0.00 0.00 spread U.S. 30-year dollar swap 0.00 0.00 spread (Reporting by Karen Brettell; Editing by Emelia Sithole-Matarise and Richard Chang)
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1.252 USD | 0.00% | -0.18% | - | ||
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0.6601 USD | 0.00% | -0.11% | - | ||
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- TREASURIES-Yields briefly touch near 10-month highs after strong US retail sales