Treasury yields dip as investors assess interest rate outlook

U.S. Treasurys declined Thursday as an uptick in weekly jobless claims sent yields lower and raised expectations the Federal Reserve would pause its rate-hiking campaign at its meeting next week.

At 4:17 p.m. ET, the 10-year Treasury yield was trading more than 7 basis points lower at 3.712%. The 2-year Treasury yield was down by 4.4 basis points at 4.506%.

Yields and prices have an inverted relationship. One basis point is equivalent to 0.01%.


Investors assessed the outlook for the economy and focused their attention on the upcoming Fed meeting in a week that is light on the economic data front.

First-time filings for unemployment benefits reached 261,000 for the week ended June 3, marking the highest level for weekly claims since Oct. 20, 2021, the Labor Department reported Thursday.

The uptick in weekly jobless claims raised expectations the Federal Reserve may pause interest rate hikes at its meeting next week.

However, various Fed officials have indicated that they do not believe the rate hikes implemented so far have had the desired effect of bringing down inflation and cooling the economy. Others argued that the full impact of higher rates had simply not yet filtered through to the economy.

Other economic data published since the central bank's last meeting has also fueled the debate. April's consumer inflation figures rose in line with expectations, while April's personal consumption expenditure price index, which is the Fed's favored inflation gauge, and May's jobs report came in higher than anticipated.

May's consumer inflation report is due Tuesday, just a day before the Fed's rate decision.