Strong U.S. Economic Data Supporting Treasury Yield Surge

U.S. Treasury markets were the focus once again for investors on Thursday, and are likely to be closely watched again on Friday. Markets across the board including the U.S. Dollar, all major currencies, dollar-denominated assets like gold and silver and U.S. equities are being influenced by the recent surge in U.S. Treasury yields.

On Thursday, the yield on the benchmark 10-year Treasury note and the yield on the benchmark 30-year Treasury bond rose to new multiyear highs as a streak of solid U.S. economic reports continued.

The yield on the benchmark 10-year Treasury note climbed to 3.122 percent Thursday, its highest market since July 8, 2011, while the yield on the 30-year Treasury bond hit 3.248 percent, its highest level since July 13, 2015.

Additionally, short-term rates also topped multiyear highs. The yield on the two-year Treasury note reached 2.598 percent, its highest since August 2008, and the yield on the five-year Treasury note hit 2.957 percent, its highest since June 2009.

U.S. Economic Data

Helping to support the climb in interest rates was a pair of strong U.S. economic reports. On Thursday, the Labor Department said new applications for U.S. jobless benefits increased more than anticipated, but the number of Americans on unemployment fell to its lowest level since 1973.

Initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 222,000 for the week-ended May 12, the Labor Department said on Thursday. Economists were looking for a rise to 215,000 in the latest week.

Also on Thursday, the Philadelphia Fed Index, a measure of manufacturing activity in the district, came in at 36.4 for April, higher than the 21.1 level expected by Wall Street economists.

U.S. Equity Markets

Rising U.S. Treasury yields may have put a lid on the recent stock market rally, but stock prices actually retreated on Thursday after President Donald Trump indicated trade talks between the U.S. and China may not be fruitful.

In the cash market, the benchmark S&P 500 Index settled at 2720.13, down 2.33 or 0.09%, the blue chip Dow Jones Industrial Average finished at 24713.98, down 54.95 or -0.22% and the tech-driven NASDAQ-100 Index closed at 7383.17, down 15.13 or -0.21%.

The S&P 500 Index was pressured by weakness in the tech sector. The Dow Jones Industrial Average was driven lower by a 1.9 percent drop in Walmart and a 3.8 percent decline in Cisco Systems. The NASDAQ slipped on weakness in Amazon, Netflix, Apple and Alphabet.