The bond market, unparalleled in predicting shifts in the U.S. economy over the decades, has a message: Interest rates aren't going to rise as high as even the Federal Reserve's own forecast.

From bond yields to futures and swaps, traders see little chance the economy will strengthen enough over the course of its expansion to compel the Fed to lift its overnight rate beyond about 3.3 percent. That's less than the historical average of 4.25 percent that New York Fed President William Dudley said would be consistent with the central bank's current target for inflation and compares with its long-term estimate of 4 percent.

The divergence reflects deepening concern among bond investors that tepid wage growth and a lack of inflation will persist for years to come and hold back growth as the Fed moves to end its unprecedented monetary stimulus. Lower peak rates will also reduce the likelihood of any selloff in longer-term Treasuries, which have rewarded holders this year with the biggest returns in two decades.