Fed Focuses on Treasury Volatility Mystery as It Plots Rate Rise
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As Federal Reserve officials look to raise interest rates for the first time since 2006, they are studying changes in the $12.7 trillion Treasury market and are worried about what they don’t know.
Officials are concerned that shifts in market structure have contributed to episodes of unusual volatility. Exhibit A: a sudden surge in bond prices on Oct. 15 that drove the biggest drop in yields for 10-year notes since 2009.