OREANDA-NEWS. February 20, 2015. US Treasury debt yields rose on Thursday, with prices surrendering some gains from a one-day government bonds rally after Greece offered concessions in its bailout bargaining with other euro zone countries.

Yields on 10-year Treasuries last stood at 2.0853 percent, reflecting a price decline of 3/32 and up from 2.068 percent on Wednesday, when Treasuries rallied on bolstered bets the Federal Reserve may delay its first interest rate since 2006.

Treasuries often benefit from investors seeking safety during geopolitical crises, but on Thursday European stocks rose on the Greece news and touched seven-year highs.

Government borrowing costs eased across the euro zone. Ten-year bond yields fell 5-7 basis points in Spain, Italy and Portugal, the countries most vulnerable to the Greek crisis.

Wilmer Stith, fixed income portfolio manager at Wilmington Trust in Baltimore, Maryland, said Treasuries, which have been in an extended slump, were also stung on Thursday by government data showing fewer than forecast Americans were filing new claims for unemployment insurance, fresh evidence that the labor market was gathering steam.

The U.S. Labor Department said initial claims for state unemployment benefits dropped 21,000 to a seasonally adjusted 283,000 for the week ended Feb. 14. Economists polled by Reuters had forecast claims falling to 293,000 last week.

"Overall, a better-than-expected release on the labor front and one that has marginally weighed on the Treasury market," analyst Ian Lyngen at CRT Capital Group in Stamford, Connecticut, said in a note to clients.

Many investors were also discounting the Fed's January meeting minutes that spurred Wednesday's rally as being overtaken by more recent U.S. economic data, such as a better-than-forecast monthly jobless report released after the Fed meeting, Stith said.

"The market's recalibrating, and thinking, maybe we shouldn't be changing where we think the Fed funds rate is going to move higher," Stith said.

Economists mostly expect the Fed to start raising rates in June, citing rapidly tightening labor market conditions. The Fed has kept its short-term rate near zero since December 2008.

According to CME FedWatch, which tracks Fed funds futures contracts, bets on a June rate hike dropped on Thursday to a nearly 64 percent probability from just over 68 percent on Wednesday and 72 percent on Tuesday.

On Thursday, the 30-year Treasury was last yielding 2.6891 on a small increase in price. Other maturities were mostly off, with the yield on the two-year note unchanged at 0.601 percent after dipping below that level during Wednesday's rally.