Treasury yields slide

US Treasury long-dated debt yields fell from multi-week highs on Thursday, tracking declines in US equities, as risk aversion crept back into the market with earnings disappointment at US tech company Intel and news of arrests over an alleged terror plot in Brazil.
US 10-year note yields, which move inversely to prices, dropped from four-week highs touched earlier in the day, while those of US 30-year bonds slid from three-week peaks. Yields on the short end of the curve slipped as well. "The decline in yields was coming from equities," said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco. "We finally saw the Dow give up its solid rally."
Treasury prices also attracted bids on news that Brazil arrested 10 people on Thursday suspected of belonging to a group supporting Islamic State (IS) and discussing acts of terrorism during next month's Olympics in Rio de Janeiro. "The Brazil arrests certainly played into investor anxiety," said Rupert. In late trading, benchmark US 10-year Treasury notes were up 5/32 in price for a yield of 1.561 percent, down from 1.580 percent late on Wednesday. Earlier, benchmark yields hit 1.628 percent, the highest level since June 24.
US 30-year bond prices were flat, yielding 2.296 percent. The yield touched a three-week peak of 2.360 percent earlier in the session. US two-year notes were up 1/32 in price, yielding 0.685 percent, down from 0.714 percent on Wednesday. Yields touched a four-week high of 0.731 percent. Yields across the curve were boosted earlier in the session by generally upbeat US economic data. Thursday's data showed US initial jobless claims hit a three-month low at a seasonally adjusted 253,000 for the week ended July 16. Mid-Atlantic factory activity, however, contracted, but details showed expanding new orders and employment.
US data since the release of a strong nonfarm payrolls report for June a few weeks ago have been positive overall, pushing yields higher since the lows hit following Britain's shock vote to exit the European Union. "Data on the economy suggests the US economy is still on track to grow at or slightly above trend," said New York-based Kirk Barneby, investment director of fixed income at Center Asset Management. "The fundamentals are there to justify rate increases." Fed funds futures rates late on Thursday suggested a more than 50 percent chance the Federal Reserve will hike interest rates at least once this year, according to CME Group's FedWatch, compared with less than 20 percent a few weeks ago.