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2018.12.1415:18:00UTC+00Treasuries Move To The Upside Amid Concerns About Global Economy

After ending the previous session roughly flat, treasuries showed a modest move to the upside during the trading day on Friday.

Bond prices pulled back off their best levels in afternoon trading but managed to remain in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2 basis points to 2.891 percent.

The strength among treasuries came as traders looked to the safe haven of bonds amid renewed concerns about the outlook for global economic growth following the release of data showing disappointing industrial output and retail sales growth in China.

The latest batch of economic data showed Chinese industrial output grew at its slowest pace in nearly three years, increasing by 5.4 percent in November after growing by 5.9 percent a month earlier.

Meanwhile, retail sales in China grew 8.1 percent in November, the weakest growth since 2003. In October, retail sales were up 8.6 percent.

The slower pace of industrial output and retail sales growth was partly due to the impact of the ongoing trade dispute with the U.S.

President Donald Trump appeared to take credit for China's disappointing economic data in a post on Twitter on Friday.

"China just announced that their economy is growing much slower than anticipated because of our Trade War with them," Trump tweeted. "U.S. is doing very well. China wants to make a big and very comprehensive deal. It could happen, and rather soon!"

Trump seemed to reference China's recently confirmed decision to temporarily lower tariffs on vehicles made in the U.S. to 15 percent from 40 percent.

On the U.S. economic front, the Commerce Department released a report showing slightly weaker than expected retail sales growth in November due to a steep drop in sales by gas stations, although underlying retail sales growth remained strong.

The Commerce Department said retail sales edged up by 0.2 percent in November after spiking by an upwardly revised 1.1 percent in October.

Economists had expected retail sales to rise by 0.3 percent compared to the 0.8 percent increase originally reported for the previous month.

Meanwhile, the report said closely watched core retail sales, which exclude autos, gasoline, building materials and food services, increased by 0.9 percent in November after climbing by an upwardly revised 0.7 percent in October.

"Along with the continued strength of the labor market, the boost to real incomes from the recent plunge in gasoline prices appears to be providing a big support to spending growth, which could continue for a few more months," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "Nonetheless, with the earlier boost from tax cuts now fading and rising interest rates likely to become an increasing drag, we still expect consumption growth to slow next year."

A separate report from the Federal Reserve showed a much bigger than expected increase in industrial production in November, but manufacturing output was unchanged.

News regarding U.S.-China trade talks may continue to impact trading next week, although traders are also likely to turn their attention to the Federal Reserve's monetary policy announcement next Wednesday.

With the Fed widely expected to raise interest rates by another quarter point, the central bank's accompanying statement and forecasts will be closely scrutinized for clues about future rate hikes.

The announcement by the Fed may overshadow several key economic reports on homebuilder confidence, housing starts, existing home sales, durable goods orders and personal income and spending.

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