On Thursday, September 19, U.S. Treasury yields closed mixed, with long-term yields increasing while the two-year yield experienced a slight decline, settling just below 3.60%. Following the Federal Reserve's recent interest rate cut, the latest unemployment data has strengthened expectations for a soft landing of the economy. Notably, the number of initial jobless claims unexpectedly decreased last week, suggesting a potential acceleration in job growth for September.

Mixed Close for U.S. Treasury Yields

On September 19, U.S. Treasury yields presented mixed results at the close. Specifically, the two-year yield decreased by 4 basis points to 3.59%, the three-year yield declined by 2.2 basis points to 3.475%, and the five-year yield fell by 0.5 basis points to 3.485%. Conversely, the ten-year yield increased by 0.6 basis points to 3.716%, while the thirty-year yield rose by 2.4 basis points to 4.05%.

These fluctuations in Treasury yields may reflect market expectations regarding the Federal Reserve's future monetary policy. Recently, the Fed announced a 50 basis point rate cut, which marks its first reduction since March 2020 and signals a transition from a tightening to an easing monetary cycle. Generally, a rate cut reduces borrowing costs, thereby stimulating economic growth and inflation; this dynamic may account for the rise in long-term Treasury yields.

Unexpected Decline in Initial Unemployment Claims

Data from the U.S. Department of Labor indicate that initial claims for unemployment benefits fell to 219,000 for the week ending September 14, marking the lowest level since May and falling below the anticipated 230,000. This downward trend suggests that, despite a slowdown in economic growth, the labor market remains robust. Furthermore, seasonally adjusted figures reveal that continuing claims for unemployment benefits decreased by 13,000 to 1.83 million for the week ending September 7, retreating from a peak not seen in over two and a half years in July.

The unexpected decline in initial claims points to a potential acceleration in job growth for September. In contrast, previous data indicated a notable cooling of the U.S. labor market, characterized by substantial reductions in hiring and a decrease in job vacancies, which raised concerns about deteriorating conditions that could hinder economic expansion. However, the current data reflect low levels of layoffs, suggesting that, despite some economic uncertainties, corporate downsizing remains minimal and the labor market continues to exhibit resilience. Consequently, this decline may enhance market confidence in the strength of the U.S. economy.

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