“We don’t want to overreact to short-term volatility in the markets when nothing in the U.S. fundamental picture has changed,” said Brett Ryan, one of Deutsche Bank’s economists responsible for its official view on U.S. rates.

The bond market is telling a different story.

Well before last week’s upheaval, which was triggered in part by China’s surprise devaluation of its currency, traders were signaling that the U.S. was having an increasingly tough time generating the type of growth to spur inflation.

They poured into Treasuries during the tumult, pushing down yields on 10-year notes by more than a half-percentage point from mid-June to mid-August. Yields fell to a low of 1.9 percent last week before ending at 2.18 percent on Aug. 28. The yield was 2.16 percent as of 8:09 a.m. New York.

The decline underscores how bond traders see little chance inflation will reach the Fed’s 2 percent goal any time in the next decade. Those expectations, which are based on the premium that bond buyers demand to own Treasuries over inflation- protected securities, fell as low as 1.44 percent last week.

That was the weakest since May 2009, when the U.S. was still mired in the worst recession in decades.

Less inflation increases the real value of fixed-income payments over time. It also suggests that Fed officials may need to re-think their view that the effects of the commodities slump on inflation in the U.S. are transitory.

Big Worry

The big worry now is that the collapse in oil prices -- from more than $100 a barrel a little over a year ago to less than $50 today -- reflects deteriorating growth in China and the rest of the world. That may weigh on inflation in the U.S. and stymie efforts by the Fed to boost rates, especially as developing countries respond by weakening their currencies against the dollar to restore demand.

“The market realizes that if the Fed is really going to go on a tear, the system is going to break and stop them,” said Robert Tipp, the chief investment strategist at Prudential Financial’s fixed-income unit, which oversees $560 billion.