US Treasury yields rise amid inflation concerns and Fed warnings

US Treasury yields rise: US Treasury yields continued their upward trend on Thursday, driven by a mix of economic data and cautious statements from Federal Reserve officials regarding the potential stall in inflation decline.

Following last week's stronger-than-expected inflation data, yields have surged to nearly five-month highs. Market expectations for rate cuts have decreased significantly, with only 42 basis points now expected by the end of the year, compared to over 160 basis points expected in January.

The first cut is now projected for September, according to CME's FedWatch Tool.

Labor market data released by the Labor Department showed that the number of Americans filing new claims for unemployment benefits remained unchanged last week, indicating ongoing strength in the labor market.

Initial claims for state unemployment benefits stayed at 212,000, in line with economists' forecasts.

Federal Reserve officials have emphasised the strength of the US labour market as a reason to delay rate cuts and avoid potential inflationary pressures.

Cleveland Federal Reserve Bank President Loretta Mester stated that she wants to see more evidence of easing inflation before considering rate cuts, while Fed Governor Michelle Bowman highlighted that progress on inflation has slowed and may have even stalled.

The 10-year Treasury note yield rose by 2.5 basis points to 4.610 per cent, while the 30-year Treasury bond yield increased by 2 basis points to 4.719 per cent. The two-year Treasury yield, which reflects interest rate expectations, was up by 2.4 basis points to 4.956 per cent.

(with Reuters inputs)