U.S. government bond prices extended losses on Thursday after the latest PPI data increased investors' worries about the slight chance of a Federal Reserve interest rate increase by year end.
The dollar edged up to session highs against the euro and yen, and U.S. stock futures cut gains.
Economists did not put too much stock into the wholesale inflation report as they await for the government's take on consumer prices on Friday.
"The headline number was bigger than expected, but that will be watered down in some sense because we know what gas has done," said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.
Jobless Claims Unchanged
Meanwhile, the number of workers signing up for first-time unemployment benefits was unchanged last week at a seasonally adjusted 311,000, the Labor Department reported on Thursday.
Economists polled ahead of that report were expecting jobless claims to inch up to 312,000 in the week ended June 9, after a previously reported 309,000 claims the prior week.
The four-week moving average, a less volatile measure of employment conditions, edged up to 311,250 from 307,500.
The number of workers continuing on benefits fell by 43,000 to 2.49 million for the week ended June 2, the most recent week these figures were available. Economists were expecting to see 2.51 million continued claims.