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A Drop in Treasury Yields is Accompanied by a Rise in Unemployment Claims and Signs of Easing Producer Prices

June 13, 2024
minute read

U.S. government debt rates continued to decline for a third consecutive day on Thursday morning, influenced by new data indicating easing inflation and a weakening labor market.

Market Developments
  • 2-Year Treasury Yield: Fell by 5.3 basis points to 4.695%, down from 4.748% on Wednesday.
  • 10-Year Treasury Yield: Dropped 2.9 basis points to 4.265%, compared to 4.294% on Wednesday, approaching its lowest level since late March to early April.
  • 30-Year Treasury Yield: Decreased by 1 basis point to 4.440%, down from 4.450% on Wednesday.

Factors Influencing the Market

Newly released U.S. economic data on Thursday showed a significant increase in initial jobless claims, which surged by 13,000 to 242,000 for the week ending June 8. This figure, the highest since last August, exceeded the 225,000 anticipated by economists polled by the Wall Street Journal.

In addition, wholesale prices fell in May for the second time in three months. The producer-price index (PPI) decreased by 0.2% last month, contrary to economists' expectations of a 0.1% increase.

The decline in Treasury yields extended the trend observed on Wednesday when a cooler-than-expected consumer-price index (CPI) for May raised investors' hopes for continued easing inflation.

Despite these signs, the Federal Reserve's latest interest-rate projections and comments from Chair Jerome Powell on Wednesday were less dovish than some investors had anticipated. The Fed now forecasts just one quarter-point rate cut for this year, a revision from the three cuts expected in March.

Upcoming Event

The Treasury is set to conduct a $22 billion auction of 30-year notes at 1 p.m. Eastern time on Thursday.

In summary, U.S. government debt rates continued to fall on Thursday morning due to new data suggesting a slowdown in inflation and a softer labor market. The 2-year, 10-year, and 30-year Treasury yields all experienced declines, driven by higher-than-expected jobless claims and a decrease in wholesale prices. Investors remain cautiously optimistic about inflation easing, despite the Federal Reserve's more conservative outlook on interest-rate cuts. The market now awaits the Treasury's $22 billion auction of 30-year notes.

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John Liu
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