December Fed Rate Hike Is Far From Certain as European Debt Fears Pressure US Yields

Expectations for another Federal Reserve rate hike in December may be premature if long-term US Treasury yields continue declining.
One market argument suggests that earlier tightening pressure was partly connected to rising long-term borrowing costs, while renewed concerns about European sovereign debt are now encouraging demand for US Treasuries.
If investors shift capital into American government bonds, falling yields could ease financial conditions and reduce the perceived urgency of another policy adjustment.
However, the relationship between European debt concerns and US yields is not automatic, and the Fed does not set rates solely to manage Treasury borrowing costs.
Inflation, employment and broader economic conditions remain central to the December decision.