(Bloomberg) — Treasuries slid as signs of sticky price pressures in a reading of first-quarter US economic growth further dimmed the outlook for the pace of Federal Reserve interest-rate cuts.

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While growth for the quarter was softer than most economists predicted, another hot reading of underlying inflation — and a softer-than-expected amount of weekly jobless claims — took precedence for bond traders.

US Treasuries fell, pushing yields on 10- and 30-year bonds to the highest of the year. Traders also pushed back expectations for the timing of the first Fed rate reduction to December.

Gross domestic product increased at a 1.6% annualized rate, while a closely watched measure of underlying inflation advanced at a greater-than-expected 3.7% clip.

The yield on benchmark two-year Treasuries rose as much as about 9 basis points to just over 5%. Meanwhile, yields on all US debt with maturities up to a decade were higher.

Swaps traders now see only about 33 basis points of Fed rate reductions for all of 2024, well below the more than six quarter-point reductions they expected at the start of the year.

“The Fed has got to buy time here. They are between a rock and a hard place,” Bob Doll, chief investment officer at Crossmark Global Investments, told Bloomberg Television on Thursday before the data was released. “I don’t think the Fed is going to raise rates — but out the curve, we’ve already seen the 10-year for example move up to 4.65%. Could there be more upside there in a buoyant economy? Absolutely.”

Investors will have to absorb later on Thursday another $44 billion of Treasury issuance with a sale of of seven-year notes. While appetite was solid for auctions of two- and five-year notes over the past two days, whether demand proves as robust for Thursday’s sale is uncertain — though higher rates may stoke interest.

(Updates prices throughout and adds detail on Fed rate-cut timing.)

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