10-year Treasury yield jumps back above 3%, key recession warning still in place

U.S. Treasury yields were rose sharply on Thursday, extending gains even as the closely watched 2-year/10-year yield curve remained inverted — a key recession signal.

The yield on the benchmark 10-year Treasury note rose nine basis points to about 3%, while the yield on the 30-year Treasury bond was up seven basis points to 3.192%. Yields move inversely to prices, and a basis point is equal to 0.01%.

Market pros track the spread between longer-duration Treasury yields and shorter-duration yields, with the former typically higher.

However, the 2-year Treasury yield climbed eight basis points to 3.043% on Thursday, holding above the 10-year. That so-called inversion, particularly if sustained, is often interpreted as a warning sign that the economy may be weakening, and a recession could be on the horizon.

The 2-year to 10-year curve first inverted on March 31, then again briefly in June.

The latest Federal Reserve meeting minutes showed that the central bank was leaning toward another 75 basis point rate hike this month as it focuses on bringing down inflation. Fed governor Christopher Waller confirmed his support for an aggressive approach on Thursday.

“I’m definitely in support of doing another 75 basis point hike in July, probably 50 in September, and then after that we can debate whether to go back down to 25s. If inflation just doesn’t seem to be coming down, we have to do more,” Waller said.

Market participants have become increasingly concerned about the prospect of a recession as economic

On the data front, initial jobless claims for the week ending July 2 showed a slight increase to 235,000. Continuing claims also rose.

The Treasury auctioned $35 billion in 4-week bills and $30 billion in 8-week bills on Thursday.

— CNBC’s Elliot Smith and Jeff Cox contributed to this report.