10-year Treasury yield slides after more benign inflation data

U.S. Treasury yields dropped for a second day Thursday as investors weighed muted inflation gains and the White House’s trade negotiations.

The 10-year Treasury yield dropped more than 5 basis points to 4.357%. The 2-year yield was off more than 3 basis points, slipping to 3.91%. Yields on the 5-year note and long-dated Treasurys also cooled.

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

The moves come after data showed that wholesale prices grew at a slower-than-anticipated pace in May. The producer price index rose 0.1% on a month-over-month basis, while economists polled by Dow Jones anticipated an increase of 0.2%. Core PPI also rose 0.1% last month, compared to economists’ call for a gain of 0.3%.

Initial jobless claims for the week ending June 7 came in at 248,000, unchanged from the prior week’s level.

Investors are also keeping a close eye on trade deals after Trump administration hinted that the 90-day pause on “reciprocal” tariffs — set to end July 9 — could be extended for some trading partners. With the deadline approaching, Treasury Secretary Scott Bessent said an extension could be granted to 18 major trading partners provided they show “good faith” in ongoing negotiations.

“This is going to start to add some more volatility as we get closer to August, which is when Treasury Secretary Bessent estimates that the Treasury may run out of the ability to pay for those principal income on bonds,” said Tom Hainlin, senior investment strategist at U.S. Bank Asset Management Group. “So we think we’re likely to see some volatility, particularly in the bond market, as we get into summer — until we get resolution on a budget deal as well.”

Traders are digesting Washington and Beijing’s framework trade agreement, negotiated in London earlier this week. On Wednesday, President Donald Trump said it was a “done” deal which would see China supply rare earth minerals while the U.S. levies 55% tariffs on the world’s second-biggest economy.

The moves came the day after a $39 billion reopening of the benchmark 10-year note showed that investor demand for Treasurys is still high despite rising concern over government debts and deficits. A $22 billion auction of 30-year Treasury bonds on Thursday also saw solid demand.

In its monthly report, the Treasury Department said the budget shortfall for May totaled $316 billion. While that marked a 9% decrease from the same period in 2024, the $1.36 trillion fiscal year-to-date deficit is 14% higher.

— CNBC’s Erin Doherty contributed to this report.

« Go Back