U.S. Treasury yields climbed on Thursday as investors considered the prospect of further interest rate hikes by the Federal Reserve and awaited fresh economic data.

The yield on the benchmark 10-year Treasury was up by 7 basis points to 4.066%. The 2-year Treasury yield was last trading at 4.889%. Earlier in the session, it traded at its highest level since July 2007.

Yields and prices have an inverted relationship and one basis point equals 0.01%.

Investors considered the likelihood of further interest rate hikes and rates staying higher for longer.

A surge in labor costs and a pullback in jobless claims reported early Thursday{

Labor costs surge, jobless claims drift lower

The amount that businesses end up paying workers for output jumped in the fourth quarter, fueling the idea that inflation is still a problem for the U.S. economy.

Unit labor costs jumped 3.2% for the October to December period, the Labor Department reported Thursday. That was well above the Dow Jones estimate for a 1.6% increase.

The increase came from a 4.9% rise in hourly compensation, minus the 1.7% increase in productivity, which was below the 2.5% estimate.

In other economic news, jobless claims fell to 190,000 for the week ended Feb. 18, down 2,000 from the previous period and below the estimate for 195,000. Continuing claims fell to 1.655 million, down 5,000.

Both data points indicate the Federal Reserve likely is on track to increase its benchmark interest rate at least another 0.25 percentage point when it meets later this month.

—Jeff Cox

Atlanta Federal Reserve President Raphael Bostic said in a speech Thursday that he's "firmly" in favor{

Fed's Bostic says he's 'firmly' in favor of sticking with quarter-point hikes

Atlanta Federal Reserve President Raphael Bostic said he thinks the central bank can stick with quarter-point interest rate hikes.

"I am still very much of a mindset that slow and steady is going to be the appropriate course of action," Bostic told media members. He added that he favors rate hikes of 0.25 percentage point, a step down the Fed took at its meeting a month ago.

"Right now I'm still in very firmly in the quarter point move pacing," he added.

Some other Fed officials have said they are open to hiking by half a point when they meet later this month. Market pricing currently points to that move, though the probability for a half-point increase has risen in recent days.

—Jeff Cox

On Wednesday, Atlanta Fed President Raphael Bostic published a statement saying he believed rates would need to go higher still and remain elevated "well into 2024" as the battle with inflation continues.

Meanwhile, Minneapolis Fed President Neel Kashkari indicated that further interest rate increases could be on the horizon and that the Fed may accelerate the pace of rate hikes again.

At its latest meeting, the central bank had hiked rates by 25 basis points. This marked a slowdown compared to the previous five increases which included four consecutive 75 basis point hikes followed by a 50 basis point hike.

Many investors have been concerned about the pace of rate hikes dragging the U.S. economy into a recession.

— CNBC's Ganesh Rao contributed to this report

Correction: The 2-year hit its highest level since July 2007. A previous version misstated the year.