The 10-year U.S. Treasury yield fell to 4% Thursday as investors assessed the latest inflation data, as well as a jump in jobless claims, that complicate the interest rate outlook.
The yield on the benchmark 10-year Treasury was last down by more than 3 basis points at 4.00%. The 30-year Treasury yield fell more than 2 basis points to 4.649%, as the 2-year yield dropped more than 3 basis points to hit 3.494%.
One basis point equals 0.01%, and bond yields and prices move in opposite directions.
Investors parsed through a raft of mixed economic signals Thursday morning, with hotter consumer prices and higher jobless claims that could muddy the path for monetary policy for Federal Reserve policymakers when they convene for their Sept. 16-17 meeting.
The August consumer price index rose at a seasonally adjusted 0.4% increase for the month, which was double the prior month, with the annual inflation rate coming in at 2.9%. Economists polled by Dow Jones had been looking for readings of 0.3% and 2.9%, respectively.
Weekly jobless claims also jumped by a seasonally adjusted 263,000, marking the highest level since October 2021. The number was also higher than the 235,000 estimate and up 27,000 from the prior period, according to the Labor Department.
“Overall, this set of data reinforced the limited inflationary fallout from the trade war (thus far) and the mounting concern that the labor market is quickly weakening,” Ian Lyngen, head of U.S. rates strategy in the BMO Capital Markets Fixed Income Strategy team, wrote Thursday. “This clears the way for a 25 bp cut next week and leaves 50 bp on the table, although we remain in the 25 bp camp.”
Markets were last pricing in a roughly 94% probability of a quarter-point cut, with a 6% chance of a bigger half-point move, according to the CME Group’s FedWatch tool on Thursday.
The latest economic data comes after Wednesday’s weaker-than-expected producer price index also reinforced expectations of a September rate cut.
— CNBC’s Jeff Cox and Yun Li contributed to this report.
