After the major indices declined in premarket trading due to investor expectations of additional interest rate hikes to combat inflation, U.S. Treasury yields increased further on Friday.

The 2-year Treasury bond’s yield increased to a level above 3.9% that it had not reached since 2007. It was up 2 basis points to 3.898% as of 5:10 a.m. ET. Due to its widespread reputation as a leading indicator of how investors believe central bank policy will change in the near future, the 2-year Treasury is extremely sensitive to policy moves.

The 10-year Treasury yield increased slightly on Friday after surging on Thursday, jumping by 1.18 basis points to 3.4708%. The 30-year and 5-year Treasury yields remained unchanged and had increased by each less than one basis point. The 5-year Treasury increased by less than a basis point to 3.6875%, while the 30-year Treasury dipped lower to 3.476%.

Prices and yields fluctuate in the opposing directions, therefore falling prices cause rising yields and vice versa. A basis point is 0.01%, or one percent.

The Labor Department on Thursday reported that unemployment claims decreased for the fifth week in a row. Additionally, data revealed that after falling in July, retail sales unexpectedly increased by 0.3% in August.

Investors understood from the Fed’s comfortable ability to keep raising interest rates that it could do so without endangering the health of the economy. The Fed will convene the following week.

According to analysts, the Fed may raise interest rates by one whole point, or 100 basis points. The rate increase would be the largest in 40 years.