The 10-year U.S. Treasury yield fell to 4% Thursday, then snapped back as investors assessed the latest inflation data, as well as a jump in jobless claims.
The yield on the benchmark 10-year Treasury was last unchanged at 4.032%, after falling to 4% earlier in the session. The 30-year Treasury yield meanwhile added more than 1 basis points to 4.688%, as the 2-year yield dropped roughly 2 basis points to hit 3.515%.
One basis point equals 0.01%, and bond yields and prices move in opposite directions.
Investors parsed through a raft of confusing economic data Thursday morning, with hotter consumer prices and higher jobless claims expected to complicate the interest rate outlook for the Federal Reserve when policymakers convene for their meeting next week.
The August consumer price index rose at a seasonally adjusted 0.4% increase for the month, which was double the prior month, with the annual inflation rate coming in at 2.9%. Economists polled by Dow Jones had been looking for readings of 0.3% and 2.9%, respectively.
Weekly jobless claims also jumped to a seasonally adjusted 263,000, higher than the 235,000 estimate and up 27,000 from the prior period, according to the Labor Department.
“Overall, this set of data reinforced the limited inflationary fallout from the trade war (thus far) and the mounting concern that the labor market is quickly weakening,” Ian Lyngen, head of U.S. rates strategy in the BMO Capital Markets Fixed Income Strategy team, wrote Thursday. “This clears the way for a 25 bp cut next week and leaves 50 bp on the table, although we remain in the 25 bp camp.”
On Wednesday, a surprise decline in the producer price index reinforced expectations that the Federal Reserve will cut interest rates at its next meeting on Sept. 17. Wholesale prices fell 0.1% month-on-month, where a Dow Jones estimate had pointed to a 0.3% rise.
Markets are now fully pricing in a September interest rate cut, after recent data also showed signs of a weakening jobs market. CME Group’s FedWatch tool on Thursday put a roughly 94% probability of a quarter-point cut, with a 6% chance of a bigger half-point move.
— CNBC’s Jeff Cox and Yun Li contributed to this report.
