Rising uncertainty about the global economy continues to boost demand for US Treasuries. “It's all a global growth fear trade,” Priya Misra, head of global rates strategy at TD Securities, tells Reuters. Expectations that China will continue to slow, coupled with forecasts of weaker growth in the US and Europe relative to recent projections, are inspiring new purchases of safe-haven Treasuries. Adding to the demand for safety and a hedge against more disinflation/deflation is the continued outlook for low inflation in the US and elsewhere.

No wonder that the current climate doesn't inspire expectations that a Fed rate hike is near. Two voting members of the FOMC have recently raised doubts about the Phillips Curve—the theory that inflation and unemployment are inversely related and so a falling jobless rate is linked with higher inflation. But that relationship appears to have broken down. Here's Fed Gov. Lael Brainard tells

To be clear, I do not view the improvement in the labor market as a sufficient statistic for judging the outlook for inflation. A variety of econometric estimates would suggest that the classic Phillips Curve influence of resource utilization on inflation is, at best, very weak at the moment. The fact that wages have not accelerated is significant, but more so as an indicator that labor market slack is still present and that workers' bargaining power likely remains weak.

Meanwhile, Treasury yields continue to trend lower. The 2- and 10-year yields slipped yesterday, the first day of trading after the three-day holiday weekend that shuttered the US bond market on Monday. Helping juice the demand for Treasuries was Fed Governor Daniel Tarullo's comment yesterday: “I wouldn't expect it would be appropriate to raise rates.”

The Atlanta Fed's GDPNow model is currently anticipating that US economic growth will be a tepid 1.0% in the third quarter report that's due later this month. That's a hefty slowdown from Q2's strong 3.9% rise (seasonally adjusted annual rate).