Treasury yields were slightly lower early Friday, as U.S. markets head for a shortened trading day following the Thanksgiving holiday.
The yield on the 10-year Treasury was 2 basis points lower at 4.22%, as the 2-year Treasury held steady at 4.208%.
One basis point equals 0.01% and yields and prices move in opposite directions.
Friday is a quiet day on the U.S. data front, following a flurry of news ahead of the trading break.
Earlier in the week, the Federal Reserve’s preferred inflation measure came in slightly higher on the previous month at 2.3%, in-line with the Dow Jones consensus forecast. Initial claims for unemployment benefits fell more than expected in the latest indication of labor market tightness.
The Fed’s November meeting minutes meanwhile suggested that if price rises and labor data continued to come in roughly as expected, it would be warranted to “gradually” lower interest rates.
However, President-elect Donald Trump’s threat on Monday of quickly passing tariff hikes targeting China, Mexico and Canada are expected by many economists to fuel domestic inflation — and to potentially see the Fed ease policy more cautiously than it otherwise would have.
Markets are currently pricing in 66.3% odds on a 25 basis-point rate cut in December, according to CME Group’s FedWatch Tool, versus a 33.7% chance of a hold.