Treasury yields rise Thursday after a jump in producer prices and the lowest jobless-claims print in 50 years highlighted signs of consistent health in the U.S. labor market.
The 10-year Treasury note yield TMUBMUSD10Y, +1.12% rose 2.2 basis points to 2.499%. The 2-year note yield TMUBMUSD02Y, +1.77% was up 2.1 basis points to 2.348%, while the 30-year bond yield TMUBMUSD30Y, +1.29% advanced 2.6 basis points to 2.930%%. Bond prices move inversely to yields.
Treasury prices retreated, sending yields higher, after investors dealt with a raft of data that indicated growth and inflation pressures were far from moribund in the U.S. Producer prices surged 0.6% in March, well above the 0.3% expected from economists polled by MarketWatch. Initial jobless claims for the week ending in April 6 fell to 196,000, its lowest since 1969.
“There is nothing in the data that suggests we will see a downturn in the labor market any time soon,” said Thomas Simons, senior money market economist at Jefferies, in a Thursday note.
The selloff helped cheapen long-dated maturities, drawing solid appetite for $17 billion of 30-year bonds. Fresh influxes of debt supply can influence trading in the outstanding bond market.
On Wednesday, U.S. Treasury Secretary Steven Mnuchin said China was close to agreeing to an enforcement mechanism for the trade deal, one of the major sticking points in negotiations thus far. Analysts attribute the inability of bond yields to bounce back this year to the cloud of uncertainty over U.S.-China trade relations, which has helped dampen business optimism and global growth.
“News like this should hearten the optimists, especially on Europe, where the soft patch has manifested itself more in ‘trade’ and ‘manufacturing,” wrote analysts at Macquarie.
Several officials from the Federal Reserve spoke on Thursday. Fed Vice Chairman Richard Clarida said the U.S. economy remained healthy, though he did expect it to slow from last year. New York Fed President John Williams said the current level of interest rates and other aspects of the Fed’s monetary policy were “well positioned.,” while St. Louis Fed President James Bullard said the campaign to normalize interest rates was largely successful, and has come to an end.
Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.