U.S. government bond prices edged lower Thursday after data continued to show the economy remains on solid footing, yet with few signs of inflation building.
The yield on the benchmark 10-year Treasury yield rose to a recent 2.913%, according to Tradeweb, from 2.908% Wednesday. The 10-year yield had fallen to 2.851% Friday from a seven-year high of 3.232% last month.
Yields, which climb when bond prices decrease, were higher after the Labor Department said Thursday that the number of workers making first-time jobless claims declined last week. Upward pressure on yields was moderated by a separate Labor Department report Thursday that showed prices for goods imported into the U.S. declined in November. The data suggests that rising tariffs imposed by President Trump have yet to produce significant inflationary pressure, analysts said.
Investors are looking for any signs that would suggest a shift in the direction of growth as Federal Reserve officials are expected to become more dependent on fresh information about the economy’s performance when making decisions about setting interest rates.
Expectations for Fed rate increases in 2019 have declined in the past month as investors have focused more signs that economic growth will slow further from its rapid pace earlier this year. While U.S. output increased at an annualized rate of 4.2% in the second quarter, the Federal Reserve Bank of Atlanta’s GDP Now tracker currently forecasts a 2.4% growth rate for the last three months of this year.
Fed-funds futures, which investors use to bet on the direction of central-bank policy, show a 13% probability that the Fed will raise rates three times by the end of June. That’s down from 29% a month ago.
“It’s not going to be robust growth,” said Daniel Oh, who manages bonds at Osterweis Capital Management. At the same time, “we just don’t see things falling apart.”
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