Treasury Yields Fluctuate

Published August 16, 2024

U.S. Treasury yields trended lower early in the week as investors digested the latest economic data reflecting cooling inflation for consumer goods. Yields rose later in the week after reports that unemployment claims dropped signaling a strong demand in the labor market.

On Wednesday, the U.S. Bureau of Labor Statistics announced that the consumer price index (CPI), which measures the cost of dozens of everyday consumer goods, increased 0.2% in July, in line with economists' forecast. The CPI year-over-year fell to 2.9%, its lowest level since March 2021 and slightly lower than economists' projections of 3.0%.

"Today's CPI print removes any lingering inflation obstacles that may have been preventing the Fed from starting the rate cutting cycle in September," noted Chief Global Strategist at Principal Asset Management, Seema Shah. "Yet, the number also suggests limited urgency for a 50 basis point cut."

The benchmark 10-year Treasury note yield opened the week of August 12 at 3.95% and traded as low as 3.81% on Wednesday. The 30-year Treasury bond opened the week at 4.23% and traded as low as 4.10% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 7,000 to 227,000 for the week ended August 10. This came in lower than economists' forecast of 235,000 claims for the week. Continuing unemployment claims decreased by 7,000, reaching 1.86 million.

"The data bear watching for signals about a more material weakening in the labor market going forward, which would have implications for [Federal Reserve] policy," said chief economic at High Frequency Economics, Carl Weinberg. "Right now, they signal modest economic slowing at worst, not contraction. There is no call for emergency or massive Fed rate cuts in today's outcome."

The 10-year Treasury note yield finished the week of 8/12 at 3.89%, while the 30-year Treasury note yield finished the week at 4.14%.