There’s no Fed dread out there. In fact, there’s less than there was a month ago, when bond yields started climbing. Anything you hear otherwise is not anchored in market reality. I know this because the rate futures market now puts a 2% probability on a rate hike next week.

Yesterday the odds of a hike were double. A week ago, the big money figured there was an 8% chance of the Fed tightening. Keep that number in mind. We’ve seen a lot of economic numbers since then but the money is still moving away from the idea that Powell and company will do anything but pause.

I’d like to answer two questions here. First, what does this mean for the market? Obviously, if short-term rates aren’t going to artificially rise for the next few months, money has less incentive to flow into that end of the yield curve.

That’s a good thing. Increased demand for any fixed-income investment depresses the associated yields. While the Fed controls overnight lending, everything else could afford to come down a little to better conform to the traditional sense of a healthy economy.

Ultimately this could push money back into the long-term bonds that have caused so many ripples in the past month. Again, a good thing. But I’d prefer it if long-term yields stay strong for awhile. After all, that’s how the yield curve heals from its current stress.

And the second question: how is it possible that long-term yields have gone up when the Fed is less likely to raise short-term rates? Easy enough. People think the rate hikes are over and so money is crowding into the highest point in the yield curve while it can.

There’s little attraction to long-term bonds right now. People think they’ll get a better deal in the stock market . . . or even in cash. That’s not a bearish signal for stock investors. It’s a good thing.