Traders Are Grappling With a Whole New World of Bond Volatility
- Omicron outbreak, Fed chief’s hawkishness both roiling markets
- Index of Treasury volatility rises to highest since March 2020
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Bond volatility is accelerating as Covid-19 and inflation fears play havoc with the policy outlook.
Treasury yields surged Wednesday after Federal Reserve Chair Jerome Powell suggested Tuesday that stubbornly high inflation warranted increasing the pace of policy tightening. That saw the market reverse course after benchmark 10-year yields fell to a two-month low this week on fears over omicron’s resistance to existing vaccines.