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Treasury Yields Fall Despite Fed Taper Talk

Source: NYSEa

U.S. Treasury yields fell on Thursday morning, despite the Federal Reserve's latest policy meeting minutes showing that the central bank was preparing to taper bond purchases this year.

The yield on the benchmark 10-year Treasury note fell 3 basis points to 1.243% at 1:30 a.m. ET. The yield on the 30-year Treasury bond slipped about 3 basis points, falling to 1.883%. Yields move inversely to prices.

Minutes from the Federal Open Market Committee's July policy meeting, released on Wednesday, showed that central bankers were making plans to pull back bond purchases before the end of 2021.

"Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year," the minutes stated.

However, FOMC members stressed that employment had not met the "substantial further progress" benchmark the Fed set before it would consider raising interest rates.

On the data front, U.S. weekly jobless claims came in at 348,000. That was below the 365,000 claims expected by economists and set a new pandemic-era low. However, the Philly Fed manufacturing index came in worse than estimates.

Mixed readings from economic data sources, including a recent drop in consumer sentiment and miss on retail sales, have raised concerns about economic growth and weighed on bond yields even as the central bank has signaled that it wants to begin easing back from its aggressive policy stance.

John Plassard, deputy director at asset manager Mirabaud, told CNBC's "Squawk Box Europe" on Thursday that he believed that FOMC members were "still data dependent."

Plassard explained that it was important to remember that the FOMC meeting took place before strong U.S. payroll figures for July came out, the University of Michigan's latest data showed a "crash" in consumer sentiment and retail sales missed expectations.

Plassard said the minutes gave a "very mixed message" which was something he didn't like, as he was expecting "more clarity" from the FOMC members.

Auctions were held on Thursday for $35 billion of 4-week bills, $30 billion of 8-week bills and $8 billion of 30-year Treasury inflation-protected bonds.

— CNBC's Jeff Cox and Yun Li contributed to this market report.

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