Treasury yields climb higher on Friday

U.S. Treasury yields moved higher on Friday as investors digested further commentary from the Federal Reserve and economic data that showed a drop in jobless claims.

The yield on the benchmark 10-year Treasury note was last up about 9 basis points at 2.974%, while the yield on the 30-year Treasury bond traded up 7 basis points to 3.213%. Yields move inversely to prices, and a basis point is equal to 0.01%.

The yield on the short-term 2-year Treasury note also traded marginally higher at 3.238%.

The rise in yields was a shift from the previous session, which saw yields cooling as markets mulled over the Federal Reserve’s released July meeting minutes. The Fed indicated that it would continue hiking rates until inflation slows down significantly, although the central bank could soon decrease its pace of tightening.

“You can’t have markets going straight up all the time and the yields are going to continue to bounce around until we get some type of additional certainty out of the Fed,” said Jeff Kilburg, chief investment officer of Sanctuary Wealth. “This doesn’t bother me one bit that the 10-year note is going back to 3%. I actually think this is healthy” so long as it stays under 3.5%.

Kilburg expects more clarity to come from the Fed’s upcoming September meeting. The central bank is considering another large rate hike St. Louis Fed President James Bullard said Thursday, adding that he can’t say for sure that inflation has peaked.

“We should continue to move expeditiously to a level of the policy rate that will put significant downward pressure on inflation … I don’t really see why you want to drag out interest rate increases into next year,” Bullard said in an interview with the Wall Street Journal.

Thursday also revealed a further slowdown in housing demand, with home sales falling nearly 6% in July as the housing market enters a contraction, while jobless claims edged down 2,000 for the week ended Aug. 13.

Markets and monetary policy officials are watching the job market closely as rate increases aim to cool a labor market and 40-year high inflation. Fed policymakers said that lowering inflation is a top priority, even if it means a decrease in hiring, according to the minutes released Wednesday.