U.S. Treasury yields for 2-, 10-, and 30-year bonds increased for the third consecutive session on September 19, 2024, following new economic data suggesting resilience in the labor market and manufacturing sector.
The yield on the 2-year Treasury remained stable at 3.603%, while the 10-year yield rose by 5.4 basis points to 3.739%, and the 30-year yield increased by 6.6 basis points to 4.073%. These closing levels were the highest for the 2-year yield since September 12, and the highest for the 10- and 30-year rates since early September.
Initial jobless claims fell by 12,000 to 219,000, marking the lowest level since May. Additionally, the Philadelphia Fed's gauge of regional business activity improved to 1.7 in September, contrary to expectations of a decline.
This positive economic data prompted a selloff in U.S. government bonds, pushing long-term yields higher, a day after the Federal Reserve cut borrowing costs by 50 basis points—the first reduction in more than four years. Michael Goosay, Chief Investment Officer at Principal Asset Management, noted that the Fed's rate cut reflects a policy shift to address emerging economic challenges.
Meanwhile, the Bank of England maintained its main interest rate at 5%, indicating a cautious approach amid global economic uncertainties.
The implications of these developments are significant, as rising Treasury yields can affect global borrowing costs and investment strategies, influencing markets worldwide.