Treasury yields pull back as investors weigh interest rate path ahead

U.S. Treasury yields edged lower Thursday as investors assessed the possibility of further rate hikes following a batch of stronger-than-expected economic data.

The yield on the 10-year Treasury last traded at 4.252%, after falling by nearly 4 basis points. The yield on the 2-year Treasury pulled back 8 basis points to 4.943%, after topping the 5% level earlier in the week.

Yields and prices move in opposite directions and one basis point is equivalent to 0.01%.

Treasurys

TICKER	COMPANY	YIELD	CHANGE
US1M	U.S. 1 Month Treasury	5.37%	+0.009
US3M	U.S. 3 Month Treasury	5.396%	UNCH
US6M	U.S. 6 Month Treasury	5.389%	-0.001
US1Y	U.S. 1 Year Treasury	5.211%	+0.008
US2Y	U.S. 2 Year Treasury	4.948%	+0.015
US10Y	U.S. 10 Year Treasury	4.467%	-0.008
US30Y	U.S. 30 Year Treasury	4.573%	-0.007

Traders assessed a series of economic reports Thursday that signaled continuing inflationary pressures and a tight labor market, further fueling concerns that the Federal Reserve's hiking cycle may not be over just yet. This included fewer-than-expected jobless claims and a greater-than-expected uptick in labor costs for the second quarter.

"Today's jobless claims and labor cost report feed worries about higher rates," said David Russell, global head of market strategy at TradeStation. "They might not put September's Fed meeting back in play for a hike, but they increase the odds of a more hawkish dot plot."

Traders will continue to monitor the 10-year Treasury yield, he said, adding that a breakout above October's peak could heavily weigh on equities.

Markets are still pricing in a 93% chance that the Fed will keep rates unchanged when it meets later this month according to CME's FedWatch tool. Expectations for a rate hike at the November however were last at roughly 43%.