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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

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.