Bond yields rose Thursday even as U.S. stocks declined, with the Standard & Poor’s 500 Index posting its biggest loss since Sept. 28, and as government and industry reports showed data falling short of economists forecasts. Asian stocks fell on Friday.
The Bank of America Merrill Lynch MOVE Index, which measures price swings in U.S. debt, climbed for a fourth day Thursday, the longest stretch of advances since June.
Testifying before Congress’s Joint Economic Committee, Yellen warned legislators about the dangers of the Fed waiting too long to raise rates. Economists surveyed by Bloomberg forecast a Labor Department report Friday will show U.S. employers added 200,000 jobs in November, above the monthly average of 67,000 for the past decade.
There’s a 76 percent chance the Fed will raise its benchmark by its Dec. 15-16 meeting, according to futures data compiled by Bloomberg. The calculation assumes the effective fed funds rate averages 0.375 percent after the first increase, compared with the current range of zero to 0.25 percent.
“The type of divergence they thought was going to happen between the Fed and ECB was far too great,” Roger Bridges, chief global strategist for interest rates and currencies at Nikko Asset Management Australia in Sydney, said of market expectations. “What we’re seeing is that maybe the Fed won’t tighten as much as the market feared, and the ECB won’t be as accommodative as the market hoped in its wildest dreams.”