Treasuries-US yields lower after Waller comments, data

Other Fed officials scheduled to speak on Thursday include Cleveland Fed President Beth Hammack and Chicago Fed President Austan Goolsbee. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, fell 5.2 basis points, on pace for its biggest drop since August 13, to 4.334%. The two-year yield had risen to 4.41% on Wednesday, its highest since January 2025. The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.377% after closing at 2.362% on Wednesday. The 10-year TIPS breakeven rate was last at 2.355%, indicating the market sees inflation averaging about 2.4% a year for the next decade. U.S. Treasury yields fell on Thursday, extending declines after comments from Federal Reserve Governor Christopher Waller that signaled a willingness to remain patient on raising interest rates, while economic data indicated the labor market remained on stable footing. Waller said in prepared remarks at a Reuters NEXT Newsmaker event in Washington that if upcoming data confirms that inflation pressures are cooling off, he is inclined to argue in favor of keeping interest rates steady at the U.S. central bank's next policy meeting. In addition, Waller said he's inclined to be patient on rate policy while watching to see if price pressures ease. Expectations for a hike at the Fed's mid-September meeting retreated after the comments, with markets now pricing in a 50.4% chance for a hike, down from 63.2% in the prior session, according to CME FedWatch. The yield on the benchmark U.S. 10-year Treasury note fell 3.6 basis points, on track for its biggest fall since August 25, to 4.758%. On Wednesday, the yield on the note hit 4.818%, its highest since November 1, 2023. On the economic front, weekly initial jobless claims climbed 2,000 to a seasonally adjusted 206,000, slightly above the 205,000 estimate of economists polled by Reuters. The data was the latest in a string of reports on the labor market this week that pointed to a slow but stable jobs market. The Labor Department will release its monthly payrolls report on Friday, which will help shape expectations for monetary policy. The yield on the 30-year bond fell 2.4 basis points to 5.243%. Yields pared some declines after the Institute for Supply Management said its nonmanufacturing Purchasing Managers' Index advanced to 55.4 last month, above the 54.2 estimate, from 54.1 in July. A reading above 50 signals expansion. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 42.2 basis points. Yields around the globe had jumped earlier this week, in part due to inflation concerns spurred by rising oil prices as attacks in the U.S.-Iran war restarted. Comments from some Fed officials supporting a rate increase also served to lift yields. "We think the market did get overbaked," said Jay Hatfield, chief executive and chief investment officer at Infrastructure Capital Advisors in New York. "The data would support a cut, but of course, headline inflation is awful. And now the December contract is more relevant, and there are still expectations of rate increases, but the data doesn't support it, so CPI is going to be critical." The Labor Department's monthly Consumer Price Index (CPI) data is due next week. U.S. crude CLc1 rose 1.15% to $92.02 a barrel and Brent LCOc1 climbed to $96.33 per barrel, up 0.73% on the day on continued supply disruption concerns.

Treasuries-US yields lower after Waller comments, data

Two-year yield and TIPS breakevens move lower

Yields fall after Waller signals patience on rates

Jobless claims edge higher as labor market stays stable

Inflation concerns and oil prices keep global yields elevated

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