While the timing of the first Federal Reserve rate hike in years has long been one of the market's most pressing questions, investors appear to have moved on to a more important query: How quickly will the Federal Reserve raise the federal funds rate once it has started the hiking process?
While the federal funds rate is currently about as low as it could go, the committee has collectively stated an intention to raise the benchmark's target up to 3.5 percent in the longer run.
The big unknown is when that long run will converge with current experience.
According to Larry McDonald of Societe Generale, the recent drop in bond yields can be explained by the inclination that "the market got ahead of itself in terms of the rate hike outlook over the next 12 months," as some recent economic data, such as Tuesday's ISM manufacturing number, have disappointed.
But unlike in recent months, bad data have not had a big effect on short-term bonds, because a December hike is still considered to be close to a lock. CME Group's Fed Watch tool places the odds of a hike announcement on Dec.16 at 75 percent.