The 10-year Treasury yield rose to a 3-week high of 4.178% on Thursday, despite the Fed cutting rates by 25 bps last week due to labor market concerns.
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Today’s jobs data may have slightly eased the Fed’s concerns. Initial jobless claims for the week ended September 20 fell by 14,000 to 218,000, reversing an early-month spike to 264,000. With a resilient labor market, the Fed has less reason to cut rates, reducing demand for Treasuries and pushing the yield higher.
Solid Jobs Data and GDP Growth Push Benchmark Yield Up
Another factor behind the yield’s rise is the Commerce Department’s final estimate of second-quarter gross domestic product (GDP), which rose to 3.8% from 3.3%. The upward revision was driven by better-than-expected consumer spending, which grew at a 2.5% pace compared to the earlier 1.6% estimate.
Looking ahead, yields will likely be affected by Friday’s Personal Consumption Expenditures (PCE) index release, which will provide the latest reading on inflation.
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