TREASURIES-US yields rise as markets brace for volatility, await Greenland details

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Trump says US will have total, permanent access to Greenland

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Even with Greenland deal, caution persists -strategist

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US data mixed, inflation benign, but little rates reaction

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US yield curve continues to flatten, as tariff risk off for now

By Gertrude Chavez-Dreyfuss

NEW YORK, Jan 22 (Reuters) - U.S. Treasury yields rose on Thursday, but remained confined to a narrow range, as investors prepared for bouts of volatility and awaited clarity on the Greenland framework deal negotiated by President Trump with European ?leaders. Trump said on Thursday he had secured total and permanent U.S. access to Greenland in a deal with NATO, whose head said allies would have to step up their commitment ?to Arctic security to ward off threats from Russia and China.

His comments came a day after Trump withdrew his tariff threats ?on European goods and ruled out taking Greenland by force. That calmed bond investors who ?had sold Treasuries the last few ?days amid global tension between the United States and Europe.

"A little bit of the policy shock has been taken off the table, but only for the moment. And ?it is a relief, but at the same time, it increased the ?market's wariness around the potential for this to happen again," said Tony Rodriguez, head of fixed income strategy at Nuveen.

"They're currently discussing a framework for Greenland but this can easily go off the rails. So geopolitical ?risk from tariffs specifically from a policy perspective is probably going to ?remain a risk ?factor for the market, more than people thought maybe a month ago."

In late morning trading, the benchmark U.S. 10-year yield rose 1.6 basis points (bps) to 4.271%, after climbing on Tuesday to its loftiest level since late August.

U.S. 30-year ?bond yields were slightly up at 4.871% . On Tuesday, they rose to their highest since early September.

On the front end of the curve, the U.S. 2-year yield was up 2.4 bps at 3.621%.

Thursday's U.S. economic reports were mixed, but had little impact on Treasuries. Data showed the number of Americans filing new applications for unemployment benefits increased marginally last week by 1,000 to a seasonally adjusted 200,000 for the week ended January 17. Economists polled by Reuters had forecast 210,000 claims for the latest week. A separate report from ?the Commerce Department's ?Bureau of Economic Analysis showed GDP increased at an upwardly revised 4.4% annualized rate, the fastest pace since the third quarter of 2023. The economy was initially estimated to have grown at a 4.3% rate in the July-September quarter. ?It grew at a 3.8% pace in the second quarter.

In other parts of the bond market, the yield curve continued to flatten on Thursday as the threat of tariffs was off the radar for now. The spread between two-year and 10-year yields narrowed to 64.8 bps from 65.4 bps the previous session.

It had steepened to as much as 70.9 bps on Tuesday, the largest gap in roughly two weeks, reflecting market concerns about sticky inflation.

Data, however, showed generally benign inflation numbers for October and November amid a government shutdown. The PCE price index grew 0.2% in November, matching ?October's gain. In the 12 months through November, the PCE price index climbed 2.8% after rising 2.7% in October.

Excluding the volatile food and energy components, the PCE price index rose 0.2%, with the same margin in October. In the 12 months through November, the so-called core inflation increased 2.8% after advancing 2.7% in October.

Analysts, however, ?said inflation numbers are currently expected to come in at a stronger pace in December. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci)