Treasury Market Volatility Back Near Record Lows

By Anthony B. Sanders

That’s The Way The Fed Likes It

Treasury market volatility is back near record lows. That’s the way The Fed likes it.

(Bloomberg) Volatility in the Treasuries market is subdued, according to Bank of America Merrill Lynch’s MOVE Index. The measure of anticipated price swings in the U.S. securities dropped below 50 on Monday for the first time in three months, putting it closer now to its record low of about 44 than it is to its high for the year of about 72 in early February. The decline may suggest traders increasingly doubt the Federal Reserve will follow through on its plan to raise interest rates at least two more time this year.

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Here is the MOVE index since 2007 where you can see the financial crisis and The Fed’s response by extinguishing volatility.

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How about The Fed’s glacial unwind of their prodigious balance sheet that you almost need an electron microscope to see?

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At least bank excess reserves are declining a bit.

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That’s the way Powell likes it, uh-huh, uh-huh.

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