The 10-year Treasury yield continued higher a day after crossing above the key 4.5% level as firm economic data Thursday suggested that the Federal Reserve is making the right move in planning to dial back rate cuts in 2025.
The yield on the 10-year Treasury rose over three basis points to 4.536%, after surpassing 4.5% in the previous session — a perceived marker of increased volatility. The 2-year Treasury yield slipped more than three basis points to 4.321%.
Yields and prices move inversely to one another. One basis point is equivalent to 0.01%.
On Thursday, investors parsed fresh jobless claims data and U.S. gross domestic product growth. Jobless claims pulled back to 220,000 for the week ending Dec. 14. Economists polled by Dow Jones forecast 230,000. Meanwhile, U.S. GDP grew at a 3.1% clip in the third-quarter, above forecast and 0.3 percentage point higher than the previous estimates. Traders could view both readings as indicative that the economy remains steady, which supports fewer interest cuts moving forward from the Federal Reserve.
The Fed cut interest rates by a quarter-percentage point on Wednesday, in a widely expected third straight reduction.
Chair Jerome Powell struck a hawkish tone on the outlook for next year, however, raising its inflation forecast and pointing to just two possible rate cuts in the horizon, down from the four signposted in September.
The chances of another rate cut at the Fed’s first policy meeting of the year in January slipped to under 10%, according to fed funds futures trading tracked by the CME FedWatch tool.
