NEW YORK (MarketWatch) — Treasury prices slipped on Thursday, sending the benchmark 10-year note yield above 3% for the first time since September.
The 10-year note (ICAP.SD:10_YEAR) yield rose 1.5 basis points at 2.998% in recent trade, but it hit 3% just before 11 a.m. Eastern, according to Tradeweb.
The benchmark yield touched 3% on some trading platforms on Sept. 5, but otherwise last closed above that level in 2011.
“If those levels are able to hold again, that should help the market steady as it limps into the end of the year, but should those levels fail to hold in thin trading, the lack of flows could potentially exacerbate the pain from any significant sell stops,” said Mike Sacchitello, technical analyst at Stone & McCarthy Research Associates, in a note.
The 5-year note (ICAP.SD:5_YEAR) yield rose half a basis point to 1.746%. The 30-year bond (ICAP.SD:30_YEAR) yield climbed 2.5 basis points to 3.927%.
The Labor Department said Thursday that jobless claims fell by 42,000 to 338,000 last week, below the consensus Wall Street forecast of 345,000. While this marks the biggest drop in 13 months, the number may be skewed by the challenges of adjusting for seasonality around the holidays.
Economic data have been improving in recent months, which prompted the Federal Reserve to announce it would scale back its $85 billion in monthly bond purchases, beginning in January. The central bank’s announcement went alongside a commitment to keeping its key policy rate low until the unemployment rate falls well below 6.5% in what’s known as forward guidance.
However, improvement in the economic data, as well as some skepticism about the Fed’s forward guidance, has helped pull forward market expectations for when the Fed could begin hiking interest rates. The 2-year note (ICAP.SD:2_YEAR) yield, which can move based on the expected path of the fed funds rate, was up a basis point on the day at 0.411%.
The market now puts a 53% probability on the first rate hike coming in April 2015, according to the CME Group’s FedWatch, which makes calculations based on fed funds futures contracts that are tied to the path of rates.
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Ben Eisen is a MarketWatch reporter based in New York.
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