Yields advance after strong economic data dents rate cut bets; US10Y reclaims 4.20%

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U.S. Treasury yields climbed on Thursday morning after strong economic data dented Federal Reserve rate cut expectations. Yields have generally been on an upswing [https://seekingalpha.com/news/4498466-yields-continue-to-rise-after-fed-rate-cut-similar-to-action-seen-after-first-cut-of-2024] amid an extended bond selloff since last week's decision by the central bank to cut interest rates for the first time in nearly nine months.

The Commerce Department revised second-quarter U.S. GDP [https://seekingalpha.com/news/4498811-us-q2-gdp-revised-higher-to-38-in-third-estimate-intensifying-rebound] growth higher to an annualized rate of 3.8% in its third estimate from 3.3%. Meanwhile, initial jobless claim [https://seekingalpha.com/news/4498845-initial-jobless-claims-drop-for-the-second-week]s data dropped for the second consecutive week.

The two indicators pushed yields off their September lows, with the rate-sensitive U.S. 2 Year Treasury yield (US2Y [https://seekingalpha.com/symbol/US2Y]) rising 5 basis points to 3.66%—its highest level since September 2. Meanwhile, the benchmark U.S. 10 Year Treasury yield (US10Y [https://seekingalpha.com/symbol/US10Y]) added 4 basis points to 4.20%, the highest since September 4.

See how yields trade across the curve here on Seeking Alpha’s bond page [https://seekingalpha.com/etfs-and-funds/etf-tables/bonds].

“The U.S. economy is resilient and the strong GDP is another indication that we are not at risk of any kind of recession, even with slowing labor market growth,” Paul Stanley, chief investment officer, Granite Bay Wealth Management stated.

Still, despite Thursday’s uptick, Treasury yields remain well below where they began the year. Year-to-date, the 2-year has dropped 60 basis points, while the 10-year has declined by 32 basis points.

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