U.S. Treasury yields inched higher on Friday as investors weighed the state of the U.S. economy after the Federal Reserve cut interest rates for the first time this year.
At 4:52 a.m. ET, the 10-year Treasury yield was up 2 basis points to 4.125% while the 2-year Treasury yield was little changed at 3.576%. The 30-year Treasury bond yield also added 2 basis points to 4.742%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
Investors are evaluating the Fed's interest rate cut this week, with policymakers voting 11-to-1 to lower the benchmark overnight lending rate by a quarter percentage point to a range between 4.00%-4.25%.
Fed Chairman Jerome Powell described the rate move as "risk management," and policymakers indicated that two more rate cuts would be forthcoming this year.
"First, markets were still benefiting from the Fed's announcements on Wednesday, where the dovish shift in the dot plot led to growing anticipation of further cuts ahead," Deutsche Bank analysts flagged in a Friday note. "Second, we had some stronger data on the US labour market, with the initial jobless claims posting their biggest weekly decline since 2021. So that helped to reassure investors that an economic slowdown would be avoided."
Lower jobless claims released on Thursday calmed investor concerns about a slowing economy or cracks in the labor market, after a brief spike last week sparked worries about potential upcoming layoffs.
There's no economic data set to be released on Friday, but investors will next week look to the personal consumption expenditures index — the Fed's preferred inflation gauge — for further insights about the health of the U.S. economy.