Fed Takes Fear Out of Markets as Volatility Plunges in Bonds, FX
- Gauges of rates, currencies volatility fell to 2017 lows
- Markets may glide through March 15 Fed decision to raise rates
Investors Take Stock as They Weigh Fed Rate Hike
From traders in the $13.9 trillion U.S. Treasury market to those dealing currencies around the globe, signs are mounting that there’s little in the pipeline for them to get worked up about in the days ahead.
Ever since Donald Trump gave his speech to a joint session of Congress last week and Federal Reserve officials including New York Fed President William Dudley ramped up odds of an interest-rate hike this month, volatility metrics across the board have plunged. The Merrill Lynch Option Volatility Estimate index, a gauge of expected price swings in U.S. debt, fell on Monday to the lowest level since October. Similarly, JPMorgan’s Global FX Volatility index dropped to the lowest since the U.S. election.