NEW YORK: US Treasury yields were slightly higher on Thursday as investors continued to absorb comments from Federal Reserve Chairman Jerome Powell on Wednesday that were seen as more bullish on inflation and the economy than expected.

Powell said the drop in inflation this year may be due to transitory factors and that economic and job growth has been stronger than the committee expected.

His comments came after the Fed meeting statement took a more cautious tone on subdued inflation.

"We're still trying to figure out where the new range is after the Fed," said Tom Simons, a money market economist at Jefferies in New York.

Interest rate futures traders see a reduced chance of a rate cut this year after Powell's comments. They are now pricing in a 54 percent chance of a rate cut by December, down from 64 percent before the Fed meeting statement, according to the CME Group's FedWatch Tool.

Given the focus on inflation, the next major catalyst that will give clues on Fed policy will be consumer price inflation data on May 10.

"We're either going to confirm that we should be taking those rate cut bets off the table, or if it comes in disappointing, then maybe those flood back in," said Simons.

Bonds were little changed on data on Thursday showing that US worker productivity increased at its fastest pace in more than four years in the first quarter, depressing labor costs and suggesting inflation could remain benign for a while.

Jobs data for April being released on Friday will be closely watched for further indications of wage pressures and the strength of the labor market.

US private employers added 275,000 jobs in April, well above economists' expectations's and the most since last July, the ADP National Employment Report showed on Wednesday.