CHICAGO: US Treasury yields edged higher on Thursday, changing direction after an earlier safe-haven rally sparked when jobless claims notched an unexpected climb.

The benchmark 10-year yield was last 0.7306%.

Guy LeBas, chief fixed income strategist at Janney Capital Management in Philadelphia, said the session's earlier risk-on tone switched to risk off as Wall Street pared losses.

"You see it in the pretty substantial reversal after a big morning rally in Treasuries," he said.

Yields on the longer end of the curve dropped to session lows after the US Labor Department reported initial claims for state unemployment benefits totaled a seasonally adjusted 898,000 for the week ended Oct. 10, compared to 845,000 in the prior week. Economists polled by Reuters had forecast 825,000 applications in the latest week.

Tony Rodriguez, head of fixed income strategy at Nuveen, said the global rise in virus cases and a lack of more fiscal aid for the US economy were center stage in the market.

"Both of those being obviously negative for near-term growth," he said.

On the stimulus front, President Donald Trump said on he was willing to raise his offer of $1.8 trillion to win support of Congressional Democrats. Trump's fellow Republican, Senate Majority Leader Mitch McConnell, said an aid package would be passed eventually, but the president's latest offer would be a tough sell to his members.

The coming week will bring more supply to the market, with $22 billion of 20-year bonds set for auction on Oct. 21 and $17 billion of Treasury Inflation-Protected Securities (TIPS) selling on Oct. 22.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was at 0.1370%, vs 0.1390% late Wednesday.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 57.2 basis points, down from Wednesday's close.