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U.S. Treasury bonds pulled back Thursday as fresh signs of improvement in the U.S. economy sapped demand for haven bonds.

A decline in the latest weekly jobless claims pointed to steady job creation. A monthly gauge of the business outlook in the mid-Atlantic region increased. The releases pushed up U.S. stocks, an indicator of investors’ appetites for risk.

In recent trading, the yield on the benchmark 10-year Treasury note was 2.352%, compared with 2.306% on Wednesday, according to Tradeweb.

Bond prices fall as yields rise.

Despite the upbeat tone of the releases, investors say the U.S. economy is running at a moderate pace, which supported the Federal Reserve’s case to proceed slowly in raising interest rates, a message officials signaled from Wednesday’s interest-rate statement.

The Fed’s go-slow approach has been driving investors to sell longer-dated bonds and move cash into shorter-dated notes.

Investors are favoring shorter-dated notes because their yields are underpinned by the Fed’s benchmark short-term interest rates. Some are concerned that a shallow path of tightening could generate inflation, which chips away bonds’ fixed income over time and is the main threat to longer-dated securities.

“A more gradual pace of increases from the Fed increases the chances that they’ll get behind the curve in terms of fighting inflation,” said Anthony Cronin, a Treasury bond trader at Société Générale SA. “This is working against the long end” of the Treasury bond market.

The yield on the two-year note, among the most sensitive to changes in the Fed’s rate policy outlook, was 0.649% compared with 0.661% Wednesday.

The yield premium an investor charges to hold the 10-year notes instead of the two-year notes was 1.7 percentage points Thursday, rising from 1.645 percentage point a day ago. In bond circles, a widening yield spread is known as a steepening yield curve.

Zhiwei Ren, managing director and portfolio manager at Penn Mutual Asset Management Inc. which has $20 billion assets under management, said the Fed’s stance has bolstered his case to buy five-year notes and sell 30-year bonds.

The Fed’s message “is very friendly” to shorter-dated Treasury notes, Mr. Ren said. He now sees the odds of the Fed raising rates in September at 50%, down from the 70% level he anticipated before the Fed statement on Wednesday.

A report Thursday showed inflation remains below the Fed’s 2% target, allowing the Fed to take its time in a tightening cycle.

The consumer-price index rose by a seasonally adjusted 0.4% in May from a month earlier, the largest gain since February 2013, but it was a tad below the 0.5% gain forecast by economists. Excluding volatile food and energy categories, so-called core prices increased 0.1%, compared with a 0.2% rise forecast by economists.

Fed-funds futures, which are used to place bets on central-bank policy, showed Thursday that investors and traders see a 19% likelihood of a rate increase at the September Fed policy meeting, compared with 28% before the Fed statement, according to data from CME Group Inc.

Many investors say longer-dated bond yields won’t rise significantly from here, citing the continuing moderate pace of the economic growth, still-contained inflation and the Fed’s slow path in raising rates.

However, Greece remains a near-term concern. Worries over the cash-strapped nation potentially defaulting on its debt payments at the end of this month had boosted demand for haven debt this week. Analysts say any deterioration would spark buying in Treasury debt.

The 10-year Treasury note yield jumped to 2.5% on an intraday basis last week for the first time since September, soaring by more than half of a point from the level in late April.