Morgan Stanley Vindicated on Treasuries as Fed Rate Odds Decline
- U.S. bank recommended five-year notes on view Fed to hold fire
- Yield declines most since July this week as data fall short
El-Erian Sees Sept. Fed Decision as Judgement Call
This article is for subscribers only.
Morgan Stanley’s bet on five-year Treasuries paid off as the notes head for their best weekly performance since July amid receding odds of a Federal Reserve interest-rate increase this month.
While Treasuries fell on Friday, they still are set to gain this week after U.S. August jobs growth trailed forecasts. The most recent figures have undercut hawkish comments by Chair Janet Yellen and her colleagues signaling possible policy-tightening. They include a report Thursday that showed manufacturing unexpectedly shrank in August. Bloomberg’s U.S. Surprise Index, which measures whether data beat or missed economists’ forecasts, dropped to an eight-week low.