Investors jump into Treasurys as retail sales fall

NEW YORK — Unexpected weakness at the nation's retailers fanned concerns about the health of the economy and boosted demand for the safety of government debt Wednesday.

Treasury prices jumped as stock market investors worried that the optimism that fed a two-month surge in stocks off of 12-year lows in March might have been overdone. The Dow Jones industrial average tumbled 184 points.

The Commerce Department reported that retail sales fell 0.4 percent last month, rather than remaining flat as economists had expected. Weak retail sales signaled that consumers are still reluctant to spend. That could put off a recovery because consumer spending accounts for more than two-thirds of U.S. economic activity.

Until this week, major stock indicators including the Standard & Poor's 500 index have jumped more than 30 percent since March 9 as investors saw incremental improvements in economic numbers as evidence that the economy was stabilizing.

The disappointing retail report upended some of that enthusiasm.

Demand for Treasurys sent the benchmark 10-year Treasury note up 16/32 to 100 1/32 and pushed its yield down to 3.12 percent from 3.18 percent late Tuesday.

Prices were already getting a boost this week by the Federal Reserve's purchases of government debt. The central bank has been looking to snap up debt and push down the yield on the 10-year note and other debt to help lower interest rates on mortgages and other loans.

The Treasury Department isn't flooding the market with fresh debt offerings this week, which is also helping prices. In recent weeks, the U.S. government has released huge amounts of securities, boosting supply and lowering prices.

The 30-year bond rose 1 5/32 to 102 19/32, while its yield fell to 4.10 percent from 4.16 percent.

The two-year note edged up 1/32 to 100, and its yield rose was unchanged at 0.88 percent.

The yield on the three-month Treasury bill slipped to 0.16 percent from 0.17 percent. The discount rate was 0.17 percent.

The cost of three-month dollar loans between banks fell to a record low. The British Bankers' Association said the London Interbank Offered Rate, or Libor, on three-month loans in dollars fell 0.03 percentage point to 0.88 percent.