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Jobless claims unexpectedly fell last week

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Treasury to auction $22 billion in 30-year bonds

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Traders continue to focus on tariff announcements

By Karen Brettell

July 10 (Reuters) - U.S. Treasury yields edged higher on

Thursday after data showed that jobless claims unexpectedly fell

last week and before the U.S. Treasury Department was set to

sell $22 billion in 30-year bonds.

The drop in the number of Americans filing new applications

for jobless benefits suggests that employers may be holding on

to workers despite other indications of a cooling labor market.

"Jobless claims came in pretty solid," but the labor market

is showing more signs of weakness, said Rob Waldner, fixed

income chief strategist and head of macro research at Invesco.

"The dynamic is a much more stagnant labor market where

there's a bit of labor hoarding going on. People are holding on

to employees and there's less churn, so it's harder to get a

job," Waldner said.

The Federal Reserve is expected to hold rates steady as it waits

to see the impact of U.S. President Donald Trump's tariff

policies, but the expectation of only a brief inflation uptick

and slowing growth is seen as leading the U.S. central bank to

cut rates later this year.

Invesco anticipates inflation will peak later this year and

fall again next year, which will support Fed rate cuts.

"We're growing a little more constructive on the Treasury

market overall," Waldner said.

Trump on Wednesday announced a new 50% tariff on U.S. copper

imports and a 50% duty on goods from Brazil, both to start on

August 1.

Fed funds futures traders are pricing in 52 basis points of

cuts by the end of this year.

The interest rate sensitive 2-year note yield

rose 0.8 basis points to 3.87%.

The yield on benchmark U.S. 10-year notes was

last up 1.4 basis points on the day at 4.356%.

The 30-year bond yield rose 0.3 basis points to

4.8785%.

Demand for longer-dated debt will be tested again on

Thursday by the Treasury's 30-year auction. The government saw

strong interest for a $39 billion sale of 10-year notes on

Wednesday and slightly soft demand for $58 billion in three-year

notes on Tuesday.

Treasury Secretary Scott Bessent said last week that there

are no plans to increase longer-dated auction sizes at current

interest rates, which has helped support demand for longer-dated

debt.