The Federal Reserve’s gauge of inflation expectations fell to the lowest level in a month before a government report this week that economists said will show the U.S. is adding jobs without driving wages higher. The central bank’s measure of traders’ outlook for inflation from 2018 to 2023, known as the five-year forward break-even rate, dropped to 2.71 percent as of the most recent figures on March 28, the lowest since Feb. 25. Fed purchases of $85 billion each month in Treasury and mortgage debt, aiming to spur economic growth by putting downward pressure on borrowing costs, have yet to send costs in the economy higher. “Inflation is stable,� said Kei Katayama, who buys non- yen debt in Tokyo for Daiwa SB Investments Ltd., which manages the equivalent of $53.4 billion. “People feel safe in Treasuries because of the huge support from the Fed.� The benchmark 10-year yield was little changed at 1.83 percent at 7:55 a.m. London time, according to Bloomberg Bond Trader data. The price of the 2 percent note due in February 2023 was 101 18/32. Yields may rise as the economy expands, Katayama said. Ten- year rates will climb to 2.31 percent by year-end, according to a Bloomberg survey of economists with the most recent projections given the heaviest weightings. Hiring Slows U.S. employers hired 199,000 workers in March, after a gain of 236,000 in February, according to the median forecast of economists surveyed by Bloomberg News before the Labor Department report on April 5. Average hourly earnings increased 2 percent from a year ago, dropping from 2.1 percent in February, the data are forecast to show. An index of prices tied to spending patterns increased 1.3 percent in February from the year before, a government report showed on March 29. The gain is below the Fed’s goal of keeping inflation around 2 percent, leaving policy makers room to keep pumping money into financial markets. Numbers today will probably show factory orders rose in February and vehicles sales were little changed in March, based on Bloomberg surveys of economists. Treasuries rose yesterday after a measure of manufacturing was weaker than economists forecast. The Institute for Supply Management’s factory index fell to 51.3 in March from 54.2 the month before, boosting demand for the safest assets. U.S. government securities were little changed this year as of yesterday, according to Bank of America Merrill Lynch indexes. German bunds returned 0.4 percent, while the MSCI All- Country World Index (MXWD) of stocks gained 6.2 percent including reinvested dividends. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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