Demand for U.S. Treasury debt fell Thursday as hopeful economic signs drew money into higher-risk investments. An increase in wholesale prices also reduced Treasurys' appeal.
Unemployment claims fell last week to the lowest in nearly four years, the latest signal that the job market is improving. As fears of another recession dissolve, investors are making riskier bets that would pay off in a growing economy.
Traders sold Treasurys after the unemployment report, pushing the yield on the 10-year Treasury note up to 1.96 percent from 1.92 percent a few minutes earlier. A bond's yield rises as its price falls.
A separate report found that wholesale prices rose modestly in January. Excluding the volatile food and energy categories, prices increased 0.4 percent, the most in six months, the Labor Department said.
Inflation generally hurts Treasurys by reducing the buying power of the fixed returns that they pay.
Also Thursday, a government auction of long-term, inflation-protected Treasurys drew weak interest _ especially from the big financial companies that trade directly with the Federal Reserve.
The government auctioned off $9 billion of 30-year Treasury Inflation-Protected Securities, priced to yield 0.770 percent. Similar securities were trading at a yield of 0.715 percent, meaning that the bids came in below market prices.
The yield on the 10-year Treasury note rose to 1.99 percent as of 4 p.m. EST, from 1.93 percent late Wednesday. Its price fell 50 cents for every $100 invested.
In other trading, the yield on the 30-year Treasury bond rose to 3.14 percent from 3.09 percent late Wednesday. Its price fell 97 cents per $100 invested.
The yield on the two-year note fell to 0.27 percent from 0.28 percent late Wednesday. The yield on the three-month T-bill fell to 0.09 percent from 0.11 percent.