NEW YORK: US Treasury yields slipped on Thursday on bets the Federal Reserve is in no hurry to raise interest rates with domestic inflation stuck below its 2 percent goal and uncertainty about global risks to economic growth at home.
The decline in yields followed Wednesday's release of minutes of the central bank's July 26-27 policy meeting in which policy-makers said they wanted to "leave their policy options open."
Thursday's data on new unemployment claims and Mid-Atlantic business activity from the Philadelphia Fed supported the notion of a continued economic expansion but not one that is strong enough to handle a steady string of rate increases, analysts and investors said.
"It's a long way from what the Fed had signaled back in December. It's about a rate hike, not a rate-hike campaign," said Matt Toms, head of public fixed income at Voya Investment Management in Atlanta.
Interest rate futures implied traders see a 10 percent chance the Fed will raise rates at its Sept. 20-21 policy meeting, down from about 14 percent at Wednesday's close, according to Reuters data.
The yield on two-year Treasury notes, which is sensitive to traders' views on Fed policy, was down nearly 2 basis points at 0.722 percent. On Wednesday, it reached a three-week peak of 0.774 percent shortly before the release of the FOMC minutes.
Benchmark 10-year Treasury notes were up 4/32 in price to yield 1.551 percent, down 1 basis point from Wednesday, while the 30-year bond was up 5/32 in price for a yield of 2.265 percent, down 0.8 basis point.
On the supply front, the US Treasury Department will sell $14 billion of five-year Treasury Inflation Protected Securities at 1 p.m. ET (1700 GMT).
In "when-issued" activity, traders expected the latest five-year TIPS supply to sell at a yield of -0.204 percent, compared with the -0.195 percent yield on the $16 billion offered in April, according to Tradeweb.
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