10-year Treasury yield falls after jobless claims increase

On Thursday, U.S. Treasury yields dipped as investors absorbed new labor market information. The 2-year yield dropped over 2 basis points to 3.848%, while the 10-year Treasury yield fell by more than 3 basis points to 4.328%. The 30-year long bond yield retreated by more than 4 basis points to 4.843%. A basis point equals 0.01%, and in the bond market, yields and prices move in opposite directions.

The Labor Department’s report on Thursday showed that weekly jobless claims exceeded expectations. Initial filings for jobless benefits totaled 247,000 last week, surpassing the Dow Jones estimate of 236,000. The decline in yields followed significant drops on Wednesday following disappointing U.S. data releases.

In May, service sector activity unexpectedly weakened to 49.9%, just below the expansion/contraction threshold of 52.1% forecasted by Dow Jones. Private sector payrolls also saw a meager increase of only 37,000 in May, falling well short of the 110,000 estimated by Dow Jones. This disappointing data raised concerns among investors about a weakening labor market and its potential economic consequences.

Despite the missed forecasts, Deutsche Bank noted in a research report published on Thursday that the latest figures are not alarming enough to reignite fears of a recession in the largest global economy. Traders are now awaiting the release of May’s nonfarm payrolls and unemployment rate figures on Friday.