Treasury yields fall below 2 percent

VIDEO1:5301:53
Cramer: Economic data doesn't make sense

Things were supposed to be a whole lot different this year when it came to the bond market.

With economic recovery taking flight and inflation accelerating, the Federal Reserve would start to raise interest rates, government bond yields, naturally, would start drifting higher and the 10-year benchmark note would end the year somewhere north of 3 percent.

That, though, was pure theory, which has had a rather uncomfortable clash with reality.

Instead, the U.S. economy hobbled through the first quarter, inflation is still well short of the Fed's target, short-term rates are anchored near zero, and the 10-year has started the second quarter nestled comfortably below 2 percent, with the next 100 basis points seemingly miles away.

Oh, the Fed still is likely to do some type of pro forma rate hike before the year closes. But the climate in the bond market looks nothing like the picture Wall Street experts painted just a few months ago.