What to watch

Déjà vu? Rates — surprisingly — tick lower

Like 2016, 2017 was supposed to be the year of rising rates.

But, so far, the bond market is flashing higher prices — and lower yields.

That’s a development few investors expected at the start of the year after the Federal Reserve hiked short-term interest rates for the first time in a year and put three additional rate increases on the table for 2017.

Yields were also supposed to spike due to a belief the economy would pick up once President Trump took office and started to put his U.S.-first policies on the fast track.

Instead, the Fed held rates steady at its first meeting of the year last month. And the 10-year Treasury bond now yields just 2.35%, down from 2.45% at the end of 2016 and below the 2.47% rate on Jan. 20 when Trump took office.

Bonds are again finding buyers, which is pushing down yields, amid the turbulence that has accompanied the president’s first few weeks in office.

Instead of rushing to pass growth-friendly policies such as corporate tax cuts and infrastructure spending, Trump’s focus out of the gate on immigration and trade has put many of the market-friendly measures on hold. As a result, there’s rising concern these promises will be put on the backburner, which could mean the economy might not perk up quite as fast as first envisioned.

Until further notice, investors continue to find safety in U.S. government bonds.