The bond market shows traders see only an 8 percent chance the Federal Reserve will raise interest rates at its Oct. 27-28 meeting following weaker-than-expected employment growth.
Treasury 10-year notes ended five days of gains Monday as stocks advanced. The yield climbed from the lowest level in almost six weeks reached on Oct. 2. Mohamed A. El-Erian said the odds of a Fed liftoff are 50 percent for the following session Dec. 15-16, while analysts at Societe Generale SA said Federal Open Market Committee officials won’t move until March.
Data due Monday will show growth in services slowed this month, based on a Bloomberg survey of economists. The U.S. added 142,000 jobs in September, versus 201,000 that analysts predicted, a Labor Department report at the end of last week showed.
“It takes October off the table, but I don’t think it takes December off the table,” El-Erian, a Bloomberg View columnist and the chief economic adviser at Allianz SE, said in an interview with Bloomberg following the jobs report.
Benchmark Treasury 10-year note yields rose two basis points, or 0.02 percentage point, to 2.02 percent as of 8 a.m. New York time, according to Bloomberg Bond Trader data. The 2 percent security due in August 2025 fell 6/32, or $1.88 cents per $1,000 face amount, to 99 7/8.
The Stoxx Europe 600 Index of shares rose a second day while U.S. equity-index futures also gained.
The U.S. 10-yearyield dropped as low as 1.90 percent on Oct. 2, the least since Aug. 24 and approaching the lowest level since April. Treasuries returned 1 percent last week, the steepest gain in six months, based on Bloomberg World Bond Indexes.
Traders have been pushing back forecasts for the move, highlighting the lack of consensus over when officials will shift policy.
Boston Fed President Eric Rosengren said Oct. 3 the U.S. economy needs to be growing at a 2 percent pace in the second half of the year to justify an interest-rate increase by December.