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10-year Treasury yield climbs as investors digest U.S. rating downgrade

Angela Weiss | AFP | Getty Images

Treasury yields popped on Thursday as investors assessed fresh economic data and continued to weigh Fitch's U.S. downgrade.

The 10-year Treasury was up about 12 basis points at 4.196%, trading around levels last seen in November 2022. The yield on the 2-year Treasury traded about 1 basis point higher at 4.898%.

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Yields and prices move in opposite directions. One basis point equals 0.01%.

Investors considered what could be next for the U.S. economy as they weighed recent developments and key economic data.

Earlier this week, Fitch Ratings announced that it had downgraded the long-term foreign currency issuer default rating for the U.S. from AAA to AA+, citing "fiscal deterioration" and concerns about governance standards and growing general debt.

Investors also assessed a series of economic data prints that offered fresh hints about the state of the labor market and could inform the Federal Reserve's next interest rate decision. This included in-line jobless claims numbers and stronger-than-expected productivity data for the second quarter.

All this comes after Wednesday's stronger-than-expected ADP report and ahead of Friday's July jobs data.

Also on Thursday, the Bank of England announced a 25 basis point hike as it continues to battle persistently high inflation.

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