NEW YORK, Nov 25 (Reuters) - Most U.S. Treasury yields dipped on Wednesday after a slate of weak economic data including weekly jobless claims, but the 30-year yield received a boost from reports the Federal Reserve at its November policy meeting discussed lengthening the duration of its bond purchases.
The Labor Department reported on Wednesday that initial claims for state unemployment benefits rose by more than expected to 778,000 in the latest week from 748,000 in the prior period. The rise suggests the surge in new COVID-19 infections and business restrictions have increased layoffs and undermined what had been the beginnings of a recovery in the labor market.
Daily U.S. deaths from COVID-19 surpassed 2,000 for the first time since May, with hospitals across the country already full, portending a surge in mortalities to come.
Consumer spending, gross domestic product and home sales were also reported Wednesday.
The benchmark 10-year yield fell, last down half a basis point on the day to 0.878%. The two-year yield was also down half a basis point to 0.160%, leaving the yield curve roughly unchanged from Tuesday.
"I think a lot of people got ahead of themselves imagining that the recovery was taking shape. To me the recovery isn't taking shape until we have a viable vaccine," said Justin Lederer, Treasury analyst and trader at Cantor Fitzgerald.
Ultimately, however, traders will be holding off from making any large decisions ahead of the Thanksgiving holiday on Thursday.
"I'm under the impression that (Treasury yields) will find a range here," said Lederer.
Yields were lower at every maturity except the 30-year bond , which rose after the Fed released the minutes from its last policy-making meeting at 2 p.m. ET. It was last up 1.5 basis points to 0.618%. Consequently, the yield curve, as measured by the spread between the five- and 30-year yields , was steeper on the day at 122.8 basis points.
Fed policymakers in November discussed how the central bank's asset purchases could be adjusted to provide more support to markets. Some participants said they expected the Fed to eventually lengthen the maturity of the bonds purchased.
The 30-year yield has risen more than 90 basis points since its low in March, and analysts have speculated that the Fed would buy more longer-dated debt to prevent those yields from rising further. The rise in the 30-year yield on Wednesday suggests investors doubt that will happen in the near future. (Reporting by Kate Duguid Editing by Chizu Nomiyama and Jonathan Oatis)
