Reversing overnight gains, U.S. Treasury yields fell on Thursday after first-quarter gross domestic product (GDP) growth was lower than Wall Street economists expected.
The yield on the 10-year U.S. Treasury, the benchmark for mortgages, auto loans and credit cards, fell more than 3 basis points to 4.384%. The two-year Treasury yield, which is more closely tied to the Federal Reserve’s short-term interest rate policy, fell nearly 5 basis points to 3.887%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
The Commerce Department reported Thursday that gross domestic product (GDP) grew at a seasonally adjusted annualized rate of 2% in the first quarter, up from 0.5% in the fourth quarter of 2025, but below Wall Street economists’ consensus estimate of 2.2%.
“First quarter GDP, which was first reported today, was less than 2% as expected, largely due to the supply shock associated with the Middle East wars,” said Art Hogan, chief market strategist at B. Riley Wealth. “If the war continues, there is a clear risk that the pace of expansion will slow.”
Separately, the Commerce Department said the Consumer Expenditure Price Index, the Federal Reserve’s recommended measure of economic inflation, rose 0.7% in March, bringing the annual inflation rate to 3.5%, in line with Wall Street forecasts.
Core PCE, which excludes volatile food and energy prices, was below headline numbers, rising 0.3% in March from February and 3.2% from a year earlier.
Energy prices have fallen back from overnight highs. Brent crude oil fell 3% to about $114 per barrel after soaring above $126, its highest since 2022. West Texas Intermediate crude oil fell 1% to trade at about $105 a barrel.
Axios reported that U.S. Central Command plans to give President Donald Trump plans for possible further military action against Iran, citing two sources familiar with the matter.
According to previous reports, President Trump has rejected Tehran’s proposal to reopen the Strait of Hormuz and indicated that the naval blockade will continue until an agreement is reached to limit Iran’s nuclear program.
—CNBC’s Jeff Cox, Michelle Fox, Lisa Kai-Lai Han and Holly Ellyatt contributed reporting.
