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Treasury yields continue to slide as inflation fears ease

Traders work on the floor of the New York Stock Exchange (NYSE) on the first day of trading of the new year on January 02, 2025 in New York City. 
Spencer Platt | Getty Images

Traders work on the floor of the New York Stock Exchange (NYSE) on the first day of trading of the new year on January 02, 2025 in New York City. 

U.S. Treasury yields slipped Thursday as inflation fears waned and comments from a Federal Reserve official raised hopes for multiple rate cuts this year.

The yield on the 10-year Treasury fell nearly 5 basis points at 4.608%. The 2-year Treasury yield was last around 3 basis points lower at 4.238%.

Yields and prices have an inverted relationship. One basis point is equivalent to 0.01%.

Initial jobless claims for the week ending Jan. 11 totaled 217,000, an increase of 14,000 from the previous week and higher than the forecast for 210,000, according to the Labor Department. Continuing claims, which run a week behind, declined slightly to about 1.86 million.

Treasury yields had tumbled Wednesday, with the 10-year yield dropping 13 basis points and the 2-year yield falling 10 basis points.

The move lower came after the release of December's consumer price index, which showed that the core-CPI print slowed to 3.2% on an annual basis, less than the 3.3% forecast by economists polled by Dow Jones. Core inflation, which strips out more volatile food and energy prices, grew 0.2% from the previous month, which was also lower than expected.

Headline inflation, meanwhile, was up 0.4% on a monthly basis and 2.9% on an annual basis. The data somewhat soothed concerns about a potential re-acceleration of prices.

"As long as the data comes in good on inflation or continues on that path, then I can certainly see rate cuts happening sooner than maybe the markets are pricing in," Federal Reserve governor Chris Waller said Thursday on CNBC's "Squawk on the Street."

Investors are watching economic reports closely as they look ahead to the upcoming Fed meeting on Jan. 28-29. Even after the broadly softer-than-expected core inflation print, traders were last still pricing in a 97.3% chance of central bank policy makers holding stead on rates at the next meeting, CME Group's FedWatch tool showed.

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