Treasury yields rise after data on weekly jobless claims

By William Watts and Jamie Chisholm

Treasury yields rose Thursday, with U.S. investors returning from a midweek holiday to gauge another update on the health of the jobs market.

What's happening

The yield on the 2-year Treasury note BX:TMUBMUSD02Y rose 1.2 basis points to 4.727%. The yield on the 10-year Treasury note BX:TMUBMUSD10Ywas up 3.6 basis points at 4.259%.The yield on the 30-year Treasury bond BX:TMUBMUSD30Y climbed 4.1 basis points to 4.397%.

U.S. markets were closed Wednesday for the Juneteenth holiday.

What's driving markets

The number of Americans who applied forfirst-time unemployment benefits last week fell slightly, but remained near a 10-month high, possibly because of the end of the school year. New claims declined by 5,000 to 238,000 from 243,000 in the prior week.

Economists polled by The Wall Street Journal had forecast new claims to total 235,000 in the seven days ending June 15, based on seasonally adjusted figures.

Continuing claims rose 15,000 to 1.828 million, the highest since Jan. 20, though the range for this metric has been unusually narrow, said Thomas SImons and Nathan Bilski, economists at Jefferies, in a note.

"The data of the past few weeks have been signaling incremental labor market weakness, albeit from a position of extreme strength. It is still too early to tell if this is another step in the process of the labor market coming into better balance, or if it is the early stages of building momentum to the downside, they wrote. "We are inclined to think that it is the former, but we are cautiously watching the next few weeks worth of data to see if a trend is emerging."

In other data, he Philadelphia Federal Reserve said Thursday its gauge of regional business activity inched down to 1.3 in June from 4.5 in the prior month. The reading was the lowest since January.

Housing starts fell to a 1.28 million annual pace from 1.35 million in April, the government said Thursday. That's how many houses would be built over an entire year if construction takes place at the same rate every month as in May. The last time housing starts were at this level was in June 2020, during the COVID-19 pandemic.

Market participants are pricing in a roughly 64% probability the Federal Reserve will have cut rates by at least 25 basis points, or a quarter of a percentage point, by its September meeting, according to the CME FedWatch tool.

The Bank of England, as expected, left its main interest rate at 5.25% on Thursday despite data showing consumer price inflation has fallen to its 2% target for the first time in three years.

The Swiss National Bank on Thursday cut its policy rate by 25 basis points to 1.25%.

The People's Bank of China on Thursday kept its one-year and five-year loan rates at 3.45% per cent and 3.95%, respectively. This was expected, but shares of Chinese property groups drifted lower.

-William Watts -Jamie Chisholm

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06-20-24 0907ET

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