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Bond World Sees ‘Live’ September for Fed, But It’s September ’17

  • U.S. debt rallies on report of weak second-quarter growth
  • ‘Loss of momentum was significant’ in the economy: FTN’s Vogel
Photographer: Andrew Harrer/Bloomberg

Forget September, or even December. Bond traders are betting the Federal Reserve won’t be able to pull off another interest-rate increase until September next year.

Earlier this week, the bond market was signaling an almost 50 percent chance that the Fed would raise rates by year-end. That optimism for the world’s biggest economy crumbled Friday, when the first reading of second-quarter economic growth showed a 1.2 percent annual pace of expansion, less than half the median forecast in a Bloomberg survey.