Initial claims dropped 27,000 to a seasonally adjusted 206,000 for the week ended Dec. 8, the Labor Department said. Last week's decline in claims was the largest since April 2015.

Claims hit 202,000 in mid-September, which was the lowest level since December 1969.

But yields were tempered by a steeper-than-expected drop in November's US import prices. Data showed import prices dropped 1.6 percent last month, the biggest decline since August 2015, after an unrevised 0.5 percent increase in October.

In early trading, US 10-year note yields rose immediately after the data, but was last slightly down at 2.898 percent from 2.906 percent late on Wednesday.

On the short end of the curve, US 2-year yields also rose after the data, but last traded modestly lower at 2.766 percent, compared with Wednesday's 2.77 percent.