The Fed has kept interest rates near zero since December 2008 and embarked on three rounds of large scale bond purchases to stimulate the U.S. economic recovery following the 2007-2009 financial crisis.
While the Fed could hike rates in June, the economy's weak winter performance has pushed expectations of a hike more toward September. Futures traders are betting on a move as late as December.
That disconnect sets up a potential collision if the central bank hikes faster than expected, a collision that could send ripples across the asset management industry.
"Part of what's going on is (investors are) not being convinced that we're going to raise interest rates," Loretta Mester, president of the Cleveland Fed, told economists last week.
Bond markets are still susceptible to another "taper tantrum" such as the one that happened in 2013 when then Fed Chairman Ben Bernanke caught investors off guard by suggesting the central bank could trim bond purchases earlier than the market expected.
Deutsche Bank pointed out in an April note that the volume of primary transactions in the Treasury market has dropped relative to the overall scale of the notes held by the public, though it also said the bank does not see "broad market impairment."
"But liquid markets could quickly turn illiquid in response to a shift in Fed policy or some other shock, which could amplify any adverse market response, as occurred during the taper tantrum," according to the note.