Volatility Drop Means Treasuries Steady Into Election
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The collapse in price swings of U.S. government debt to a four-year low shows increasing investor confidence that yields will stay at about record lows amid growing competition for a dwindling supply of the safest assets.
Rates may stay steady beyond June, when the Federal Reserve finishes swapping $400 billion of short-term debt for longer-term securities in a program known as Operation Twist, based on a measure of volatility in three-month options for U.S. 10-year interest-rate swaps. The so-called 3m10y swaption rate is about the lowest since June 2007, when the housing bubble burst.