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Bond Traders Face More Volatility as Fed Uncertainty Increases

  • Option volatility is much too low, TJM’s David Robin says
  • Index of Treasury swings implied by options rose last week
The Marriner S. Eccles Federal Reserve building stands in Washington, D.C.
Photographer: Andrew Harrer/Bloomberg
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An apparent change in tone from top Federal Reserve policy makers could mean that muted volatility in the Treasury market is coming to an end.

That’s the take from one bond-market veteran following comments last week from Federal Reserve Chairman Jerome Powell and Vice Chairman Richard Clarida that have dampened market expectations of central-bank increases.