Bond Traders on Tenterhooks After Whipsaw Week With FOMC Ahead
- Gauge of bond volatility jumps to highest since 2008 crisis
- Swaps show three-in-four odds of quarter-point hike next week
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Bond traders are turning their focus to next Wednesday’s pivotal Federal Reserve decision after what has been the most volatile week in US debt markets in more than a decade.
US two-year yields were whipsawed at least 20 basis points a day for six straight sessions through Thursday — including a drop of 61 basis points — as concern over the global banking system and relief at central bank stabilization measures have kept investors on tenterhooks. Market pricing for the Fed’s March 21-22 meeting has lurched between another quarter-point hike, and the first rate pause in more than a year.