Bond traders in the U.S. responded to the brewing crisis in Italy by sharply reducing their forecasts for how many times the Federal Reserve will raise interest rates this year. In reality, it’s too soon to make that call. The U.S. economy is in a very different place compared with previous rounds of the European debt crisis. To be sure, Fed policy makers will be watching the European situation closely for signs of contagion, but they will be watching the U.S economy even more closely.
