NEW YORK, March 27 (Reuters) - U.S. Treasury long-term
yields rose to their highest levels in over a month on Thursday
as investors weighed the inflationary impact of President Donald
Trump's latest tariff moves alongside fresh data showing
continued economic resilience.
Trump unveiled late on Wednesday his plan to implement 25%
tariffs on imported cars and light trucks effective next week,
while the duties on auto parts are expected to begin from May 3.
Investors are also bracing for a wave of reciprocal tariffs he
plans to unveil next week, though the U.S. president has hinted
there may be room for flexibility in the final policy.
Meanwhile, in a sign the labor market is holding up, the number
of Americans filing new applications for unemployment benefits
slipped last week, while the jobless rate appeared to have held
steady in March, Labor Department data showed on Thursday.
That data followed other strong readings earlier this week,
including the services sector in S&P's PMI index for March and
the durable goods orders report for February, which were both
stronger than anticipated.
"Yields are starting to feel a bit of a trend here as U.S.
economic data is coming in better than expectations," said
Matthew Miskin, co-chief investment strategist at John Hancock
Investment Management. "Maybe there is a bit of an inflation
input priced in, but growth isn't as bad as we thought."
Treasury yields, which move inversely to prices, declined
marginally after the release of fourth-quarter gross domestic
product growth data.
While the headline figure was revised to 2.4%, higher than
the consensus estimate of 2.3% in a Reuters poll, the data also
showed consumer spending growth in the last three months of 2024
was revised lower by two-tenths of a percentage point to 4%. An
analyst at BMO Capital Markets said in a note that the specifics
within the fourth-quarter economic growth data were likely to
tilt first-quarter GDP estimates lower.
Benchmark 10-year yields were last at about
4.36%, about three basis points higher than on Wednesday. They
earlier hit an intra-day high of 4.4% - the highest level since
February 24. Longer-dated 30-year yields touched a
high of 4.755%, the highest level since February 20.
Two-year yields, which more closely reflect
market expectations for changes in monetary policy, were last at
3.99%, about two basis points lower on the day.
That meant the closely watched yield curve that plots the
premium of 10-year yields over two-year yields widened to about
37 basis points, the widest since mid-January.
Later on Thursday, the Treasury will sell $44 billion in
seven-year notes, the last of this week's government debt sales.
A two-year note sale on Tuesday was well-received, while a
five-year note issuance on Wednesday met lukewarm demand.