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Treasury yields slide again after PPI fell in May

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U.S. Treasury yields slipped once again on Thursday after the latest inflation data showed an unexpected drop.

The rate on the 10-year Treasury slid 5 basis points to 4.242%. The benchmark note yield also hit its lowest level since April 1, briefly trading at 4.24%

The 2-year Treasury yield also fell 6 basis points at 4.691%. Yields and prices move in opposite directions and one basis point is equivalent to 0.01%.

The producer price index released Thursday showed a decline of 0.2% in May. That can be welcome news for investors looking for signs of cooling inflationary pressures. Economists polled by Dow Jones expected prices to tick up 0.1% in the month.

Weekly jobless claims data also published Thursday came in at 242,000, well above the 225,000 forecast from economists. That can offer another positive indicator for those hoping the Federal Reserve has seen enough evidence that elevated interest rates have tightened the economy.

These releases come after the Fed on Wednesday held rates steady at 5.25%-5.50% and suggested it would lower rates just once later this year, down from three rate cuts forecast in March. The U.S. central bank indicated slight optimism that inflation remains on track to trend back toward the Fed's 2% goal, allowing for some policy loosening over the coming months.

"Inflation has eased over the past year but remains elevated," the post-meeting statement said. "In recent months, there has been modest further progress toward the Committee's 2 percent inflation objective."

Treasury yields tumbled in the prior session after the May consumer price index report was unchanged month over month.

— Jeff Cox contributed to this report.

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