U.S. Treasury Yield Fluctuates Amid Mixed Economic Signals

WASHINGTON, D.C. — The 10-year U.S. Treasury yield dropped to 4% on Thursday before recovering, as investors evaluated newly released inflation data alongside an unexpected rise in jobless claims. By the end of the day, the yield was slightly down by 1 basis point, settling at 4.021%. Earlier in the day, it hit a low of 4%.

Meanwhile, the yield on the 30-year Treasury slid 1 basis point to 4.667%, and the 2-year yield decreased by 2 basis points to 3.513%. With bond yields moving inversely to prices, this change reflects investor sentiment.

On the economic front, Thursday’s reports revealed that the Consumer Price Index (CPI) rose by a seasonally adjusted 0.4% in August, which is double the increase of 0.2% recorded in July. This brought the annual inflation rate to 2.9%, aligning with economists’ forecasts, according to Dow Jones.

Simultaneously, weekly jobless claims surged to 263,000, exceeding the initial estimate of 235,000 by 27,000 claims, as reported by the Labor Department. Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, stated, “This set of data reinforced limited inflationary fallout from the trade war and rising concerns about a weakening labor market.”

The mixed signals from the data complicate the Federal Reserve‘s interest rate outlook ahead of its next policy meeting scheduled for September 16-17. Currently, markets predict a 94% probability that the Fed will implement a quarter-point cut, with only a 6% chance for a more significant half-point reduction.

This latest economic context follows previous reports indicating weaker-than-expected performance, which have reinforced investor expectations of a forthcoming rate cut.