Treasury Yields Drop From Four-week Peak as First-quarter Gdp is Revised Downward

Treasury yields fell Thursday morning after revised first-quarter U.S. GDP growth figures showed the smallest rate of economic growth in nearly two years, coming in below previous estimates.

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Market Movements:

• 2-year Treasury yield (BX): Dropped 4.4 basis points to 4.939% from Wednesday's 4.983%.
• 10-year Treasury yield (BX): Decreased 5.8 basis points to 4.565% from 4.623% on Wednesday.
• 30-year Treasury yield (BX): Fell 4.8 basis points to 4.694% from Wednesday's 4.742%.

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Wednesday’s levels marked the highest yields for all three Treasuries since April 30, according to 3 p.m. Eastern time figures from Dow Jones Market Data.

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Driving the Market:Revised data released Thursday indicated that the U.S. economy grew at a rate of only 1.3% in the first quarter, down from the previously reported 1.6%. This lower growth rate was primarily attributed to weaker consumer spending.

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Additionally, initial jobless-benefit claims increased by 3,000 to 219,000 for the week ending May 25. This was slightly above the 218,000 new claims estimated by economists polled by The Wall Street Journal.

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As of Wednesday, the benchmark 10-year Treasury yield had surged by 15.2 basis points over two trading sessions. This increase was driven by investor concerns following three disappointing U.S. government-debt auctions, unexpectedly strong consumer-confidence data, and Federal Reserve officials' comments suggesting that persistent inflation could necessitate higher borrowing costs for an extended period.

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Looking Ahead:On Friday, markets are anticipating April’s reading from the U.S. personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure. This data will be closely watched for further insights into inflation trends and potential impacts on future monetary policy.

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In summary, the decline in Treasury yields on Thursday was influenced by revised GDP growth figures indicating a slowing economy, increased jobless claims, and investor reactions to recent economic data and Fed commentary. The upcoming PCE price index reading will be a key focus for assessing inflation and its implications for interest rates.

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