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A surprisingly strong reading from the Philadelphia Fed index Thursday helped Treasury yields recover from early-morning declines, leaving them slightly below their levels from Wednesday night.

The U.S. 10-year note yield (10_YEAR) traded as low as 2.303%, 5.6 basis points below its Wednesday evening level, before recovering to 2.343% after the Philly Fed index surged to 40.8 in November, its highest reading since December 1993.

Yields rise as prices fall.

“I think that the Philly Fed print was the big data surprise of the morning. It took a bit of the wind out of the sales of the Treasury market, because [Treasurys were] trading higher ahead of the release,” Ian Lyngen, senior rates strategist at CRT Capital Group.

The Philadelphia Fed index is the result of a voluntary survey of business owners in the third Federal Reserve district.

A higher-than-expected U.S. jobless-claims number initially sparked the short-lived rally in U.S. Treasurys, which drove yields lower. But the rally came to an abrupt end after the Fed index data was released.

Some 291,000 Americans applied for unemployment benefits last week, 2,000 less than the week before. Economists polled by MarketWatch had expected 280,000 new applications.

The 2-year note (2_YEAR) yield fell 29 basis points to 0.496% ahead of the Philly Fed data, before returning to 0.525%, flush with its Wednesday night level.

The 30-year bond (30_YEAR) yield fell 6 basis points to 3.018% ahead of the auction, before recovering to 3.061%, 1.6 basis points lower than its Wednesday night level.

The yield curve between the 2-year note and 10-year contracted by 40 points compared with its level at 3 p.m. Eastern Wednesday. The contraction came mostly from the long end of the curve, a sign that investors are more optimistic about near-term inflation risk.