REFILE-TREASURIES-Yields fall as economic optimism fades, retail sales disappoint

 (Corrects day of the week in first paragraph to Tuesday,
corrects typo in third paragraph)
    By Karen Brettell
    NEW YORK, Nov 17 (Reuters) - U.S. Treasury yields fell on
Tuesday as data showed that U.S. retail sales increased less
than expected in October, underscoring expectations that growth
may slow this quarter.
    Retail sales rose 0.3% last month, below economists’
expectations of 0.5%. Spending has been restrained by spiraling
new COVID-19 infections and declining household income as
millions of unemployed Americans lose government financial
    “This is the first sign that Q4 is going to be pretty weak,”
said Tom Simons, a money market economist at Jefferies in New
York. “The government failed to deliver on any kind of stimulus
package… we’re starting to see the effect of inaction over the
summer now.”
    Optimism over vaccines that claim to have a high success
rate against COVID-19 has boosted risk sentiment in the past
week, sending benchmark 10-year yields to eight-month highs. 
    But the rollout of any vaccine will take time and the
government is unlikely to launch new stimulus until at least
next year, which will weigh in the economy in the interim.
    Benchmark 10-year yields fell three basis points
to 0.877%, after reaching 0.975% last week.
    The yield curve between two-year and 10-year notes
 flattened three basis points to 70 basis points.
    The Federal Reserve is expected to shift more of its bond
purchases to longer-dated debt if it views yields as rising too
far and investors will be looking for any signs that this may be
forthcoming when Federal Reserve Chair Jerome Powell speaks on
Tuesday at a Bay Area Council Business Hall of Fame awards
    Fed Vice Chair Richard Clarida on Monday appeared to
downplay speculation that the Fed to change its $120 billion
program of monthly bond purchases as soon as December to better
nurse the economy along.
    He said he was not concerned by a recent small rise in U.S.
Treasury bond yields, and that borrowing costs are still "very
    The Treasury Department will sell $27 billion in 20-year
bonds on Wednesday and $12 billion in 10-year Treasury
Inflation-Protected Securities (TIPS) on Thursday.
    November 17 Tuesday 9:34AM New York / 1434 GMT
 US T BONDS DEC0               172-18/32    0-21/32   
 10YR TNotes DEC0              138-60/256   0-52/256  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.085        0.0862    -0.003
 Six-month bills               0.0975       0.0989    -0.002
 Two-year note                 99-231/256   0.1752    -0.004
 Three-year note               100-16/256   0.229     -0.005
 Five-year note                99-80/256    0.3904    -0.018
 Seven-year note               99-20/256    0.6358    -0.023
 10-year note                  99-252/256   0.8766    -0.029
 20-year bond                  95-72/256    1.3994    -0.031
 30-year bond                  99-228/256   1.6296    -0.029
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         8.50         0.25    
 U.S. 3-year dollar swap         7.50        -0.25    
 U.S. 5-year dollar swap         6.00        -0.25    
 U.S. 10-year dollar swap       -0.75        -0.50    
 U.S. 30-year dollar swap      -33.25        -0.50    
 spread (Editing by Nick Zieminski)