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U.S. bond yields rose on Thursday as investors turned their attention to Friday’s November producer price index for November and next Tuesday’s consumer-price index report before next week’s Federal Reserve’s interest rate decision.
What’s happening
-
The yield on the 2-year Treasury
TMUBMUSD02Y,
4.286%
advanced to 4.304% versus to 4.256% on Wednesday. -
The yield on the 10-year Treasury
TMUBMUSD10Y,
3.457%
rose to 3.485% from 3.407% as of late Wednesday. -
The yield on the 30-year Treasury
TMUBMUSD30Y,
3.420%
rose to 3.454% from 3.414% Wednesday afternoon.
What’s driving markets
With a relative dearth of major U.S. macroeconomic information on Thursday, investors continued to contemplate the prospect of a still too-strong U.S. economy and whether a soft landing is “anywhere near achievable,” according to Stephen Innes, managing partner at SPI Asset Management.
Others attributed Thursday’s rise in yields to profit-taking by bondholders ahead of Friday’s producer price index report for November.
Read: Treasuries Yields Are Rising Thursday. Bondholders Are Taking Profits.
The Treasury yield curve remained deeply inverted, with the spread between 2- and 10-year rates at minus 82 basis points, as traders factored in a slightly greater chance that the fed-funds rate could get to 5% and higher by February. Fed-funds futures traders now see the likelihood of such a scenario happening at 10.7%, up from 9.1% on Wednesday, after factoring in a better-than-not chance of a half-percentage point rate hike on Dec. 14, according to the CME FedWatch Tool.
Data released on Thursday showed that U.S. weekly initial jobless benefit claims rose slightly to 230,000 in early December, pointing to what could be a slow erosion in the labor market as the U.S. economy weakens.
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