Markets haven’t exactly been jittery since, but there’s certainly been a global rush into government paper over the past week, with yields on Swiss and Japanese 10-year bonds falling even deeper into negative territory, and those on German 10-year Bunds threatening to go into the minus column. The 10-year U.S. Treasury yield is a towering 1.64%, but has now fallen below the level of Feb. 11 – the bottom of the panicky start to 2016.
As for a rate hike, forget about it in June, according to Fed Funds futures, which now put the probability of a move next week at less than 2%. July? Now, just about a 20% chance.
In fact one would now have to go all the way out to December to find short-term rate punters expecting more than a 50% chance of the Fed lifting rates.