I know the TIPS market isn't the most liquid market, but this looks to me like its pretty stark signal that what markets are worried about is that the current estimate for Fed policy decisions will be disastrously deflationary. And the implications of that will make themselves clear pretty quickly after the rate hike decision.
One way to interpret this is to disregard the TIPS market. Another way to interpret this is that the question going forward isn't so much the trajectory of Fed policy rates, but the level of the natural rate. How do we figure out what the natural rate is? We watch the Fed do what they're going to do, and wait to see if all hell breaks loose. This looks like insurance against hell breaking loose. It's probably more expensive than we might expect it to be because the FOMC has a recent habit of disregarding the TIPS market and causing all hell to break loose.
Hat Tip: (Ed Bradford)