US Treasuries: Yields push higher after latest jobless claims

NEW YORK: Treasury yields moved higher on Wednesday after new US jobless claims, the last major economic data before the New Year, came in lower than forecasts.

The yield on 10-year Treasury notes ticked up 1.9 basis points (bps) from Tuesday’s close and last stood at 4.147 percent. This is 42.6 bps lower than a year ago when yields closed 2024 at 4.573 percent, and it is 65.6 bps below the 2025 high point of 4.803 percent reached on January 13.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was up 1.7 bps and last stood at 3.471 percent. This is 76.9 bps lower than 4.24 percent a year ago and 93.1 bps below a year-high 4.402 percent reached on January 13.

This marks the first year since 2020 that the 10-year yield saw a yearly drop, while the two-year yield is on track for its biggest yearly drop since 2020.

The US dollar five-year forward inflation-linked swap , seen by some as a better gauge of inflation expectations due to possible distortions caused by the Fed’s quantitative easing, was last at 2.444 percent.

Yields have fallen over the course of 2025 as the US Federal Reserve has gradually made cuts to its key interest rate, in a shift from its largely hawkish stance on rates between 2020 and 2024.

Data on Wednesday pushed yields higher after initial jobless claims for the week ended December 27 came in lower than economists’ estimates. There were 199,000 claims last week, versus 220,000 forecast in a Reuters poll of economists.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 67.4 bps. This is 6.6 bps below a year-high of 74 bps.

Market odds of a cut in a key interest rate at the Federal Reserve’s January meeting were last at 14.9 percent.

Market participants are watching closely for any key data points that could point to a rate cut in January. This will likely come in the first month of 2026 with the next major inflation and jobs reports, market participants said.