TREASURIES-Treasuries consolidate ahead of Powell, foreign demand data

By Alden Bentley

NEW YORK, April 16 (Reuters) - Yields on U.S. Treasury securities were consolidating recent losses in tight ranges on Wednesday, barely reacting to better-than-expected data on U.S. consumer purchases and marking time before a speech by Federal Reserve Chair Jerome Powell.

Yields were little changed after the Commerce Department reported that retail sales surged 1.4% last month, pointing to a relatively healthy consumer side, which accounts for about two thirds of U.S. economic activity.

President Donald Trump's 25% global car and truck tariffs came into effect in early April, with industry analysts and manufacturers warning that the duties would significantly raise motor vehicle prices. Car makers reported a big jump in auto sales in March and some attributed that to a rush by buyers "to try and beat the tariffs."

Likewise, news showing a bigger-than-expected 0.3% fall in industrial production last month prompted little movement.

The yield on the benchmark U.S. 10-year Treasury note US10YT=TWEB was unchanged at 4.323%.

The afternoon brings the potential for bigger movements, if not as severe as last week's near 50 bp surge in the benchmark 10-year yield prompted by Trump's back and forth on tariffs and frantic speculator and investor deleveraging.

The Treasury Department will auction a reopened 20-year note, with results due around 1 p.m. (1700 GMT). Powell's speech and moderated Q&A at the Economic Club of Chicago should start hitting the wire at 1:30 p.m. and monthly Treasury data on foreign holdings of Treasuries is due at 4 p.m.

While the February Treasury International Capital System (TICS) report is a bit dated, it will show how much major foreign holders like Japan, and especially Trump's primary tariff target China, sold, if they sold at all, before the tariff crisis over the last two weeks. The trade policy rollercoaster brought much talk of overseas investors reducing their dollar and U.S. debt positions.

"China has already diminished its influence or participation over the last year and I think they will continue to remain not involved or marginally involved in our Treasury market going forward. So yields will pick up because of less demand," said Joe Rinaldi, president and chief investment officer at Quantum Financial Advisors in Rockville, Maryland.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations, fell 2.9 basis points to 3.799%.

The U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=TWEB, closely watched as an indicator of growth expectations, was at a positive 52.0 basis points, steepened from +49.3 late Tuesday.

The yield on the 30-year bond US30YT=TWEB rose 0.7 basis points to 4.783%.

Powell last spoke on April 4 in what proved to be an in-between period - two days after Trump's announcement of a global baseline tariff of 10% on most U.S. imports and hefty additional levies on goods from dozens of key trading partners, and five days before Trump abruptly put the latter duties, with the exception of China, on hold for 90 days in the face of the ensuing financial market upheaval.

Powell and other officials have said they may be forced to choose between ensuring inflation stays controlled as tariffs potentially drive prices higher or focus on supporting jobs in the face of widespread household and business uncertainty and softening demand.

The term structure in Fed fund futures 0#FF: shows traders are betting on at least a 25 basis point cut by the Federal Open Market Committee at almost every meeting in 2025, for a total easing of 100 bps from the 4.25% to 4.50% range in place since December.

"I think it's a wait and see till the end of the summer, and I think that's when Powell and the FOMC reduce rates. And I don't think they do it in a ferocious way," said Rinaldi, who said that it could take months for the impact from tariffs to show up. "I think they do it 25 basis points and then see what happens again."