10-year Treasury yield falls as traders weigh recession risk

The yield on the benchmark U.S. 10-year Treasury note fell sharply Thursday, as investors continued to assess the likelihood of a recession.

The yield on the 10-year Treasury note dropped 7 basis points to 3.089%. Earlier in the day, the yield hit a low of 3.005%, or its lowest level in roughly two weeks. The yield on the 30-year Treasury bond fell roughly 4 basis points to trade at 3.198%. Yields move inversely to prices.


Market participants are increasingly concerned that aggressive monetary tightening could tip the world's largest economy into a recession. Federal Reserve Chairman Jerome Powell capped two days of testimony before Congress on Thursday, reiterating that the U.S. central bank is "strongly committed" to cooling the soaring inflation rate.

"At the Fed, we understand the hardship high inflation is causing," Powell said to the Senate Banking Committee on Wednesday. "We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so."

Last week, the Fed increased its benchmark funds rate by 75 basis points, its largest increase since 1994, but it is thought aggressive tightening could mean exerting further downward pressure on growth.

Several banks on Wall Street raised their odds of a recession this week. UBS increased the chance of a recession to 69%, pointing to weak reports in housing, industrial production and capital goods.

"We are now watching out for any further negative follow-through or whether we simply hit a local peak and some growth momentum in the hard data resumes," UBS said in a Thursday note.

Citigroup pointed to a drop in consumer spending that could make a soft landing more difficult for the Federal Reserve, raising the probability of a recession to 50%.

Goldman Sachs said the probability of a downturn is "higher and more front-loaded" than it was previously, raising the chances of a U.S. recession to 30%, up from 15%, over the next year.

On Thursday, the Labor Department said U.S. weekly jobless claims fell 2,000 to a seasonally adjusted 229,000 for the week ended June 18, though the labor market remains tight.

— CNBC's Elliot Smith contributed to this report.