10-year Treasury yield closes out 2025 lower for year, but ticks a bit higher on final day

The U.S. 10-year Treasury yield was slightly higher on Wednesday, yet was set to end 2025 lower amid Federal Reserve rate cuts and sticky-but-trending-lower inflation.

The yield on the 10-year Treasury rose more than 1 basis point to 4.141%. The yield on the 2-year Treasury was also last seen less than 1 basis point higher at 3.463%.

Yields and prices move in opposite directions. One basis point equals 0.01%.

Yields reversed course and moved higher after initial jobless claims for the week ended Dec. 27 came in at 199,000, the Labor Department reported Wednesday. That's down 16,000 from the previous week's upwardly revised level of 215,000 and below the 220,000 that economists polled by Dow Jones had estimated.

"The filings for first-time jobless benefits are volatile during the holidays and adverse winter weather in many years, but the lack or any material weakness in the jobs market is striking in that there is no sign the economy is anywhere near the shores of recession," said Christopher Rupkey, chief economist at FWDBONDS.

"The labor market strength with low-firing definitely, low-hiring maybe, is likely to carry forward into 2026 because so far, the Trump economic agenda with its radical changes to trade and immigration policy, along with the firing of thousands of Federal government workers, has not sent the economy off the rails as many economists forecast," he added.

The swing upward in yields following the report captures what has been another choppy year for the bond market, spurred by factors such as uncertainty surrounding the impact of President Donald Trump's tariff policy and the Federal Reserve's interest rate path.

After finishing 2024 above the 4.5% level, the 10-year Treasury yield fell sharply to 4.045% a day after Trump's "reciprocal" tariffs announcement in early April, then touched 4.5% a week later after the president announced he was temporarily dropping the tariff rate to 10% for most countries. In the later third of the year, the benchmark yield oscillated around 4% as the Fed issued its first of three rate cuts this year in September but inflation remained above 2% and signs of weakness in labor market developed

The Fed on Tuesday released minutes from its divided Dec. 9-10 meeting, which concluded with a vote to lower interest rates again that appeared to be an even closer call than the final vote indicated. U.S. stocks held slightly negative following the release. Traders slightly raised bets that the Fed would cut again in April.

Bond markets will be closed on Thursday for New Year's Day.