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Treasury yields ease ahead of big August jobs report on Friday

Angela Weiss | AFP | Getty Images

U.S. Treasury yields fell on Thursday as investors looked to the release of key jobs data which could provide insight into the state of the U.S. economy.

The 10-year Treasury yield was trading 3 basis points lower at 4.088%, but the 2-year Treasury yield — most sensitive to the Federal Reserve's fed funds interest rate — ticked down less than 3.1 basis point to 4.85%.

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Yields and prices move inversely to one another. One basis point equals 0.01%.

The personal consumption expenditures index, closely monitored by central bank policymakers, ticked up 0.2% month-over-month in July and 4.2% year-over-year, matching estimates from economists polled by Dow Jones. Personal spending, however, great at a faster pace, expanding by 0.8% versus economists' forecast of 0.7%.

Fed Chairman Jerome Powell said last week at the central bank's annual Jackson Hole symposium that inflation remains too high and indicated that interest rates may go higher still.

Investors had previously been hoping that the Fed's latest interest rate increase in July marked the end of the rate-hiking cycle which began in March 2022 and aimed to cool the economy and fight inflation.

Economic data released on Wednesday showed the economy may be pulling back, with the second-quarter gross domestic product revised downward to a 2.1% annual growth rate.

ADP reported Wednesday that private employers added 177,000 jobs in August, well below the revised total of 371,000 added in July. Economists surveyed by Dow Jones were expecting 200,000 jobs added in August.

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