By Ira Iosebashvili 

U.S. government-bond prices rose Wednesday after worse-than-expected economic data and signs of potential delays in a trade deal with China.

The yield on the benchmark 10-year Treasury note ended at 1.750%, down from 1.773% Tuesday. Yields fall when bond prices rise.

Retail sales decreased a seasonally adjusted 0.3% in September from a month earlier, the first monthly decline since February, the Commerce Department said Wednesday. Economists polled by The Wall Street Journal had expected an increase.

The release is another concerning economic sign for investors trying to gauge whether the decadelong U.S. economic expansion is coming to an end. Data earlier this month showed U.S. factory activity contracted to a 10-year low.

Investors tend to buy Treasurys when they anticipate a weakening economy. Many are also piling into U.S. government bonds because they believe the Federal Reserve is more likely to shore up growth by once again cutting rates in coming months, a move that would guide bond yields lower and buoy prices.

Those expectations have helped push the yield on shorter-term Treasurys below the yield on longer-term ones in recent sessions. For several months, the yield on three-month Treasurys has exceeded the benchmark 10-year yield, a phenomenon known as an inverted yield curve.

Investors and economists monitor the dispersions of Treasury yields because the curve typically inverts ahead of recessions. The curve's inversion earlier this year boosted concerns of an economic slowdown, but its recent reversal doesn't mean the economy is out of the woods, investors said.

Matt Watson, portfolio manager at James Investment Research, said that after inverting, the yield curve often returns to its more typical shape when a recession draws closer.

Mr. Watson said he would probably increase the maturity of bonds in his portfolio and cut stockholdings should the yield curve continue to stay in its present shape.

"This is something we are keeping a close eye on," he said. "We do think we are closer to the end of the economic cycle than the beginning."

Investors are also closely following the details of the "phase one" trade deal reached between the U.S. and China last week. Despite China's pledge to buy more U.S. farm products, questions remain over how much, the time frame for purchases, and what the U.S. might have to give in return. The U.S. still plans to impose new 15% tariffs on $156 billion in consumer goods starting Dec. 15.

Write to Ira Iosebashvili at ira.iosebashvili@wsj.com

(END) Dow Jones Newswires

October 16, 2019 16:15 ET (20:15 GMT)

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