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U.S. Government-Bond Prices Fall on Jobs, Inflation Data

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04/11/2019 | 03:57pm EDT

By Daniel Kruger

U.S. government-bond prices fell Thursday after data showed declining claims for jobless benefits and rising business prices, signs of continued economic expansion.

The yield on the benchmark 10-year Treasury note rose, snapping two consecutive days of declines, rising to 2.502% from 2.479% Wednesday. The yield remains more than 0.1 percentage lower than at the start of this year.

Yields, which rise when bond prices fall, climbed after the Labor Department said Thursday that initial jobless claims, a proxy for layoffs across the U.S., declined by 8,000 to a seasonally adjusted 196,000 in the week ended April 6. That is the lowest since 1969, when the labor market and population were much smaller.

The Labor Department also said Thursday that the producer-price index climbed in March, boosted by a rebound in energy prices.

Prices rose a seasonally adjusted 0.6% in March from a month earlier, the biggest increase since October. Some investors saw the increase as a potential sign that inflation could be firming after a soft patch around the end of last year. Excluding the often volatile food and energy categories, producer prices were up a more modest 0.3%.

Minutes from the Federal Reserve's March meeting, released Wednesday, indicated that officials see little reason to raise interest rates this year, barring a sudden spike in inflation. Policy makers have adjusted their approach to the economy this year after raising interest rates four times in 2018.

As recently as December, Fed officials had been penciling in two rate increases for this year. The shift in outlook began early this year in response to a surge in financial market volatility, and it has supported demand for both risky assets such as stocks and corporate bonds, and for safe assets, such as government bonds.

"A dovish Fed explains why stocks are doing so well and why yields" are stable, said Donald Ellenberger, head of multisector strategies at Federated Investments. "It's not that complicated right now."

Yields also rose as the Treasury Department auctioned $16 billion of 30-year bonds, adding to the supply of available debt. This is the third offering of government notes and bonds this week totaling $78 billion.

Write to Daniel Kruger at Daniel.Kruger@wsj.com

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