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US Treasury yields spike amid economic data, Fed rate hike

Traders in the 10-year bond options pit at the Chicago Board of Trade signal orders.
Frank Polich | Reuters
Traders in the 10-year bond options pit at the Chicago Board of Trade signal orders.

U.S. government debt prices fell Thursday, continuing their path lower after the Federal Reserve raised its benchmark rate by 25 basis points Wednesday and signaled a faster-than-expected tightening cycle for next year.

The yield on the benchmark 10-year Treasury note was higher at around 2.604 percent after breaking above 2.6 percent, while the yield on the 30-year Treasury bond was also higher at 3.169 percent. Yields move inversely to prices.

The gap between U.S. and German 10-year bond yields reached its widest since at least 1990, according to Reuters data on Thursday morning.


Symbol
Yield
 
Change
%Change
US 3-MO
---
US 1-YR
---
US 2-YR
---
US 5-YR
---
US 10-YR
---
US 30-YR
---

Wednesday saw the Fed surprise markets with a forecast that showed it could raise rates three times next year, instead of two.

In economic news, CPI (Consumer Price Index) rose 0.2 percent in November, in line with expectations. Weekly jobless claims, meanwhile, came in at 254,000. The Philadelphia Fed business index rose 21.5 in December, versus a November read of 7.6, while the Empire State manufacturing index rose to 9.0 in December from 1.5 in November.

Investors also digested manufacturing data from IHS Markit, with the December manufacturing PMI index coming in at 54.2, marginally above November's 54.1. A number above 50 indicates expansion within a sector. "Manufacturing output expanded for the seventh consecutive month in December, thereby signalling a sustained rebound from the soft patch seen in the second quarter of 2016," IHS said.

The NAHB homebuilder sentiment index rose 7 points to 70, easily beating expectations.

CNBC's Patti Domm contributed to this report