TREASURIES-US yields edge higher as jobless claims fall

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 US2YT=RR yield rose 0.8 basis points to 3.87%.

The yield on benchmark U.S. 10-year notes US10YT=RR was last up 1.4 basis points on the day at 4.356%.

The 30-year bond US30YT=RR 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.