treasury yields fell on tuesday pushing the 30year rate to its lowest level since september as the likelihood of further interestrate increases by the federal reserve collided with fears of a us slowdown tuesdays drop in yields was a textbook example of slowdown fear repricing as the fed prepares to push policy rates up and terminal estimates higher even as the headwinds facing the economy build said bmo capital markets strategists ben jeffery and ian lyngen following mondays betterthanexpected survey of servicesector activity and fridays healthy jobs data the reports raised worries that the federal reserve may need to continue increasing borrowing costs for longer even if it slows the pace of interestrate hikes as soon as next week markets are pricing in a 77 probability that the fed will lift its policy interestrate target by another 50 basis points to a range of 425 to 450 on dec 14 according to the cme fedwatch tool the central bank is mostly expected to take its fedfunds rate target to above 5 by june in us economic releases tuesday the us trade deficit widened 54 in october to a fourmonth high of 782 billion as the global economy weakened what analysts are saying the market is realizing that the labor markets strength is the biggest hurdle to a fed pause or pivot because employment is a barrier to lower inflation said ryan belanger founder and managing principal of claro advisors a wealth management firm in boston investors appears to be repricing novembers optimism which was fueled by hopes that the fed would be willing to pause its pace of rate hikesthe fedfunds rate is likely to reach close to 6 over the next year and it may be decades before we see 0 interest rates again belanger said the fed has been crystal clear on its intentions to slow the economy in order to cool inflation and its unwise to fight the fed at this point