10-year Treasury yields dip as stronger GDP data clouds rate path

U.S. Treasury yields remained steady on Wednesday as traders prepared for a shortened trading day ahead of the holiday season.

The 10-year Treasury yield — the benchmark for U.S. government borrowing — was slightly lower at 4.157%. The yield on the 2-year Treasury note rose slightly to 3.532%. The 30-year bond yield decreased to 4.817%.

One basis point equals 0.01%, and yields and prices move in opposite directions.

According to the latest data from the Labor Department, jobless claims for the week ended Dec. 20 dropped to 214,000, lower than the previous week’s 224,000 and below the Dow Jones forecast of 225,000.

Investors are also analyzing recent Commerce Department figures showing a 4.3% growth rate for the U.S. economy in the third quarter, the fastest pace in two years. This unexpected strong performance may complicate the Federal Reserve’s decision-making on interest rates.

National Economic Council Director Kevin Hassett, a potential candidate for the next Fed chair, criticized the Fed for not cutting rates quickly enough compared to other central banks. However, Cleveland Fed president Beth Hammack believes rates should stay unchanged for the next few months due to inflation concerns outweighing labor market weakness.

Market expectations, as indicated by the CME FedWatch Tool, suggest that rates will likely remain stable until April before any potential rate cuts.

Bond markets will close early at 2:00 p.m. on Wednesday and will be closed on Thursday for Christmas Day.