This week's big calendar event is the Federal Reserve's Open Market Committee (FOMC) meeting, which concludes on Wednesday with expectations favouring a quarter-point rate increase.
Indeed, Treasury yields indicate that markets have priced in a rise in the Fed funds rate from 0.75-1% to 1-1.25% as the rate-sensitive two-year Treasury yield holds around the 1.3% level.
Inflation pressures are weakening, however, and surveys of purchasing managers indicate growth in business activity is beginning to slow – albeit from robust levels.
This clouds the view of future Fed operations. A further rate increase this year cannot be forecast with any certainty, and the Fed will be closely watched on Wednesday for any announcement on balance sheet reductions.
Andreas Johnson, economist at SEB, says: "For now we maintain our forecast that the June hike will be followed by a hike in September."
"Uncertainty has increased, however. Unless inflation starts to accelerate or wage growth takes off sharply in the US, we will push back our expectations."
UK interest rates
There's not much chance of the Bank of England raising its main rate on Thursday given the added economic uncertainties presented by last week's UK election result.
A hung parliament resulting in a rather weak looking coalition between the Conservatives and Democratic Unionists from Northern Ireland has not filled the markets with confidence.
The pound is nearly 2% weaker than before the election, while bond yields are falling as investors seek safe positions in the Gilt market.
Inflation is routinely outpacing wage growth, creating a squeeze on household spending that prevents the BoE from making a move on interest rates.
"It is highly unlikely that the Bank of England changes interest rates in the foreseeable future and that is priced in to money market rates," says Chris Iggo, chief investment officer fixed income at Axa Investment Managers.