Treasury yields remained steady on Thursday following reports indicating a contraction in the U.S. economy during the first quarter and flat inflation readings in March. The benchmark 10-year Treasury note yield increased slightly by over 2 basis points to reach 4.196%. Meanwhile, the policy-sensitive 2-year note decreased by less than 1 basis point to 3.617%. One basis point equals 0.01%, and yields move inversely to prices.
This stability occurred despite a rise in weekly jobless claims. The Labor Department reported that initial unemployment claims rose to 241,000 last week, surpassing the Dow Jones economists’ forecast of 225,000. This development increases anticipation for Friday’s nonfarm payrolls report, as other economic indicators have weakened.
On Wednesday, the Commerce Department announced that gross domestic product (GDP) fell at an annualized rate of 0.3% in the first quarter, marking the first decline in three years. Although this contraction was largely driven by a surge in imports ahead of President Donald Trump’s tariff order in early April, it raises concerns about potential economic recession. Consumer spending grew minimally at a 1.8% pace, while reduced federal government expenditures also affected growth figures.
The day’s data provided mixed signals regarding inflation: the personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, showed a significant quarterly increase but remained largely unchanged in March.
Traders currently anticipate virtually no chance of an interest rate cut when the Fed meets next week, although they still expect the central bank to begin easing in June. Recent bond market trends suggest a bias toward lower growth, which could push the Fed toward supporting the economy with rate cuts.
— new from CNBC