U.S. government debt prices were lower Thursday after the preliminary GDP reading for the second quarter showed an economic contraction.
Shortly after, the yield on the benchmark 10-year Treasury note rose by about 2 basis points to 2.75%. The yield on the 30-year Treasury bond moved higher by 7 points to 3.07%. Yields move inversely to prices and one basis point is equal to 0.01%.
Second-quarter GDP slipped 0.9%, the Bureau of Economic Analysis said Thursday. This marked the second-straight negative quarter for GDP, a metric which has historically often coincided with a recession.
The market moves came after the Fed decided to raise interest rates by 75 basis points for a second month in a row to combat high inflation. Chairman Jerome Powell said the central bank will be making rate hike decisions on a meeting-by-meeting basis.
In addition, the Fed also said the U.S. economy is not in recession as “there are just too many areas of the economy that are performing too well.” The comments pushed U.S. stocks higher during Wednesday’s session.
Investors looking for further clues into the state of the economy are awaiting a reading on second-quarter GDP slated for Thursday. While two back-to-back negative quarters of growth is viewed by many as a recession, the official definition is more nuanced, taking into account additional factors, according to the National Bureau of Economic Research.