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Morgan Stanley Says Forget September as JPMorgan Tips Weak Jobs

  • ‘We found little at Jackson Hole to sway our view’: Hornbach
  • Morgan Stanley recommends five-year Treasuries despite losses

Treasury bull Morgan Stanley predicts the Federal Reserve will forgo raising interest rates next month, and policy makers said nothing in Jackson Hole, Wyoming, to change its mind.

Treasuries pared a decline on Tuesday after Vice Chairman Stanley Fischer didn’t reinforce a market interpretation of his recent comments that a rate increase in September can’t be ruled out. The Wall Street heavyweight is recommending investors continue to buy five-year U.S. sovereign debt, even as the securities head for their worst month since February of last year.

Fed Chair Janet Yellen said Friday the case for higher rates had strengthened, driving the market-implied odds of an increase at the Sept. 20-21 policy meeting to 42 percent that day, from 24 percent at the start of that week. Fischer, who suggested a jobs report due this Friday will be key, said on Tuesday that the Fed is sensitive to the economic situation outside of the U.S. In any case, jobs data may disappoint, according to JPMorgan Chase & Co.

“We found little at Jackson Hole to sway our view on the U.S. Treasury market,” Morgan Stanley strategists Matthew Hornbach and Guneet Dhingra wrote in a client note. “While August payrolls present an...