The U.S. Federal Reserve may find it hard to resist an “insurance cut” in interest rates this summer, Mohamed El-Erian, chief economic adviser at Allianz, said after the U.S. Labor Department issued a dismal payrolls report on Friday.

“The case for an interest rate ‘insurance cut’ this summer is building to a point that makes it hard for the Fed to resist,” El-Erian told Reuters.

“This weaker-than-expected jobs report, and notably so, will fuel concerns about what has been an impressively solid U.S. economy to date. This would also be a development that would increase the general headwinds facing the global economy.”

This week, a number of Fed officials including Chairman Jerome Powell hinted they were open to lower interest rates to preserve the U.S. expansion, which would be the longest in history by this summer.

To be sure, the Wall Street Journal reported that Fed officials are beginning preparations for a June policy meeting as trade tensions darken the economic outlook, raising possibility of interest-rate cut in weeks or months ahead.

Such a scenario is making a rate cut possible—if not at their meeting on June 18-19, then in July or later, the Journal explained.

The officials need to decide what would trigger such action, how much more information they want before making a decision and how to signal their intentions and plans. They are to begin their customary premeeting quiet period at the end of this week, WSJ.com reported.

Meanwhile, a Citi currency strategist said on Friday he expects the Fed to reduce key U.S. borrowing costs by 50 basis points in September, followed by a 25 basis-point rate cut in December.

There is a “material risk” of a 25 basis-point rate decrease at the Fed’s July policy meeting and “maybe a premature end” of its balance sheet runoff in June, due to a challenging global environment and sluggish domestic inflation, Citi FX strategist Ebrahim Rahbari wrote in a research note.

To be sure, Treasury yields tumbled on Friday, with 10-year yields hitting their lowest since September 2017 as domestic employers hired far fewer workers than expected in May, raising bets the Federal Reserve would lower interest rates.

Analysts blamed the pullback in hiring on escalating trade tensions between the United States and its trading partners. The U.S. Labor Department said employers added 75,000 workers last month, well below the 185,000 projected by economists polled by Reuters and a downwardly revised 224,000 in April.

The weak payroll reading sparked buying in U.S. government debt, fed by expectations the Fed might lower short-term rates 75 basis points before year-end.

"The Fed won’t react to one report, even one as important as payrolls," Sal Guatieri, senior economist at BMO Capital Markets, wrote in a research note. "But given the broadening trade war, easing labor cost pressures (despite a tight labor market) and already-low inflation, it won’t take much more weakness in employment, in particular, to spur a rate cut."

Trade tensions remained high. The White House said its 5% tariff on Mexican imports was on track for Monday. Chinese President Xi Jinping called for world powers to protect the global multilateral trade system.

At 10:09 a.m. (1409 GMT), yields on U.S. 10-year Treasury notes were 5.60 basis points lower at 2.067%. They touched 2.053% after the payrolls report, their lowest since September 2017. Two-year yields were 7.80 basis points lower at 1.803%. They fell to 1.775%, which was just above their lowest since December 2017.