Treasury yields end at highest levels in up to 2 weeks after jobless claims, Philadelphia Fed's factory gauge

By Vivien Lou Chen

Two-, 10- and 30-year Treasury yields finished higher for a third straight session on Thursday after fresh U.S. economic data indicated that the labor market and factory sector were continuing to hold up.

What happened

The yield on the 2-year Treasury BX:TMUBMUSD02Y was little changed at 3.603%, versus Wednesday's 3 p.m. Eastern time level of 3.602%. The yield on the 10-year Treasury BX:TMUBMUSD10Y jumped 5.4 basis points to 3.739%, from 3.685% on Wednesday.The yield on the 30-year Treasury BX:TMUBMUSD30Y rose 6.6 basis points to 4.073%, from 4.007% on Wednesday.Thursday's closing levels were the highest for the 2-year yield since Sept. 12, and the highest for 10- and 30-year rates since Sept. 3-4.

What drove markets

In data released on Thursday, initial jobless-benefit claims fell by 12,000 to 219,000 for the seven days that ended on Sept. 14 - the lowest level since May.

Separately, the Philadelphia Fed's gauge of regional business activity rose to 1.7 in September, a sign of improving conditions. Economists polled by the Wall Street Journal had expected a minus-1.1 reading in September.

The pair of data releases triggered a selloff in U.S. government bonds that sent long-term yields higher on Thursday, just a day after the Federal Reserve reduced borrowing costs by 50 basis points. Wednesday's action by the Fed was the first interest-rate reduction in more than four years.

"In response to emerging economic challenges, the Fed's substantial rate cut signals a shift in policy aimed at mitigating more severe risks," said Michael Goosay, the New York-based chief investment officer and global head of fixed income for Principal Asset Management.

In other data, leading indicators for the U.S. economy sank 0.2% in August, the privately run Conference Board said Thursday. That was the sixth-straight monthly decline. Meanwhile, the Treasury's $17 billion auction of 10-year TIPS was solid and produced above-average nondealer bidding, according to BMO Capital Markets strategist Vail Hartman.

Outside the U.S., the Bank of England left its main rate unchanged at 5% on Thursday.

-Vivien Lou Chen

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09-19-24 1554ET

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