The 10-year Treasury yield continued to charge higher Thursday, one day after the Federal Reserve changed its outlook for how many times it will lower rates in 2025, and as the latest economic numbers confirmed that the economy remains robust even with today's borrowing costs.
The yield on the 10-year Treasury jumped more than seven basis points to 4.57% after topping 4.50% on Wednesday, signaling investors' pessimism over the inflation backdrop and the amount of room there is for easier monetary policy. The 2-year Treasury yield fell 3.6 basis points to 4.32%.
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Yields and prices move inversely to one another. One basis point is equivalent to 0.01%.
On Thursday, investors weighed the latest weekly claims for unemployment benefits and the final numbers for third quarter U.S. gross domestic product growth. Jobless claims dropped to 220,000 in the week ended Dec. 14, below the 230,000 that economists polled by Dow Jones had forecast.
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GDP grew at a 3.1% clip in the third quarter, 0.3 percentage point above what economists had estimated. Both reports painted a pictuire of an economy that isn't in need of much stimulus from the Federal Reserve.
On Friday, the November personal consumption expenditures index, the Fed's favorite measurement of inflation, is reported by the Commerce Department. Wall Street is forecasting that it will show little progress in the fight against higher prices.
The Fed cut interest rates by a quarter percentage point on Wednesday, to a range of 4.25% to 4.50%, in a widely-expected third straight reduction.
Money Report
Chair Jerome Powell struck a hawkish tone on the outlook for next year at his press conference after Wednesday's central bank meeting, however. Fed policymakers raised their inflation forecast and pointed to just two possible rate cuts in 2025, down from four cuts that had been expected in September.
The chances of another rate cut at the Fed's first policy meeting of the year in January slipped to less than 10%, according to fed funds futures trading tracked by the CME FedWatch tool.
