Treasury yields jump by most in at least a week after fresh data ease near-term recession concerns

By Vivien Lou Chen

U.S. government debt sold off on Thursday, sending yields up by the most in up to two weeks, after a batch of new data showed the economy and labor market continuing to hold up as the Federal Reserve's annual Jackson Hole Economic Symposium got under way.

What happened

The yield on the 2-year Treasury BX:TMUBMUSD02Y rose 8.8 basis point to 4.009%, from around 3.921% on Wednesday. The yield on the 10-year Treasury BX:TMUBMUSD10Y advanced 8.5 basis points to 3.862%, from roughly 3.777% on Wednesday.The yield on the 30-year Treasury BX:TMUBMUSD30Y rose 8.3 basis points to 4.135%, from around 4.052% on Wednesday.Thursday's rise in 2- and 10-year yields was the biggest since Aug. 15. The increase in the 30-year rate was the largest since Aug. 7.

What drove markets

In data released on Thursday, a pair of S&P surveys found the U.S. economy grew at a slight clip this month, indicating little threat of a recession.

Read: U.S. economy grows again in August, S&P finds, and should ease near-term recession fears

Separately, initial jobless-benefit claims inched up to 232,000 for the seven days that ended Aug. 17, from 228,000 in the prior week, but still signaled a relatively low level of layoffs. Economists polled by the Wall Street Journal had expected 230,000 new claims.

U.S. government debt cheapened on Thursday "in a move that found justification in the economic data, although we expect that position-squaring was also an underlying motivation that saw 2-year yields edge back above the 4.0% threshold," said BMO Capital Markets strategists Ian Lyngen and Vail Hartman.

Meanwhile, Thursday's $8 billion auction of 30-year Treasury inflation-protected securities produced mixed results, according to Lyngen.

Traders turned their attention to the start of the Federal Reserve's Jackson Hole Economic Symposium, with Chair Jerome Powell set to speak on Friday. On Thursday, Boston Fed President Susan Collins told Fox Business Network that a rate cut will soon be appropriate. Philadelphia Fed President Patrick Harker said in a separate interview with CNBC that the central bank needs to start the process of lowering borrowing costs in September.

-Vivien Lou Chen

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08-22-24 1600ET

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