Heightened concerns about the spread of delta variants have prompted traders to scale back their bets on a Fed rate hike.

Interest rates implied by Eurodollar futures after 2024 fell about 18 basis points on Monday, removing most of the across-the-board rate hikes from the market's medium-term outlook. The expected rate hike of nearly 100 basis points has been eliminated as Eurodollar futures have risen since the beginning of April.

Treasury yields fell to their lowest level in months on Monday as an increase in cases of the delta variant of the coronavirus prompted investors to reflect on optimistic assumptions about a global economic recovery. Market quotes reflect expectations of US interest rates five years from now back to where they were in late January.

Extended reading: virus variants wreak havoc, sending Treasury yields down 1% and coming back into view

According to the Chicago Mercantile Exchange, position data showed a significant decrease in positions, with preliminary open contracts for the first five (bundle) quarterly futures each down by more than 176000. These so-called pack span from one year to June 2026, and all decline.