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U.S. Treasury bond yields slipped to fresh five-month lows Tuesday as traders pared bets on any near-term moves on rates or support from the Federal Reserve amid increasing concern that Delta-variant infections will slow the global economic recovery.

Benchmark 10-year note yields were pegged at 1.167% in early Tuesday trading, the lowest since mid-February and a move that takes the July decline to around 28 basis points. 

That just about matches the 30 basis point dip recorded over the whole of the second quarter and underscores the volatility Treasury markets are experiencing as investors re-set growth and inflation expectations amid a jump in Delta infections and uneven economic data.

The gap between 10-year and 2-year note yields, in fact — a closely-tracked indicator of near-term growth prospects — has narrowed to around 97 basis points, suggesting weaker prospects for the second half of the year.

Nvidia, Blue Origin and Jeff Bezos, Apple, Netflix – 5 Things You Must Know Tuesday.”A gloomy view of the world is something that is more familiar to interest rate market participants than others. Yield curves have been pricing a dismal outlook for growth and inflation ever since their bull-flattening accelerated in July of this year,” said ING strategist Padhraic Garvey. 

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The CME Group’s FedWatch tool, in fact, is now pricing in no chance of a 2021 rate hike, when just last week the odds were trading at around 6%. 

Markets are noting similar moves in Europe, as well, where benchmark 10-year German bund yields, a proxy for risk-free rates around the region, slumped to a five-month low of 0.41% Tuesday.

Curiously, the biggest risk to any bond market rally — inflation — continues to run hot, with June CPI rising at the fastest rate since 2008 and Treasury Secretary Janet Yellen warning of “several months” of faster readings before the effect of supply-chain disruptions and commodity price increases fade into the first half of next year.

That said, Cathie Wood, the star fund manager at the head of next-generation investment group and the ARK Innovation EFT A (ARKK) – Get Report, thinks the current spike in inflation, which hit a 13-year high last month, with quickly give way to a longer run of deflation as the impact of accelerating technologies provides broader consumer choices and more efficient production and distribution.

Larry Fink, CEO of BlackRock  (BLK) – Get Report, the world’s biggest asset manager with more than $9 trillion under its umbrella, told CNBC’s ‘Squawk Box’ program that he doesn’t believe inflation with be “transitory”, as the Federal Reserve has insisted, adding that policymakers’ focus on jobs and infrastructure will imbed price pressures into the economy for at least the next few years.

Bank of America’s closely-watched Fund Mangers’ survey, which polled 270 panelists with $805 billion in assets under management, identified inflation as the market’s key risk, but only 26% think it’s likely to remain permanent.