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US Yields Stuck: Bond Market Anxious
16 Jan
Summary
- 10-year Treasury yield range marks longest streak of minimal change.
- Yields have stayed within a narrow 4.1% to 4.2% band since December.
- Previous periods of low yield volatility preceded significant selloffs.
The 10-year Treasury note's yield is on track for its fifth consecutive week of minimal fluctuation, a phenomenon not seen in over two decades. This sustained period of low volatility, with yields largely confined between 4.1% and 4.2% since mid-December, is causing unease in the bond market.
This unusual calm is primarily attributed to expectations of stable US monetary policy. However, market strategists note that past instances of such constricted yield ranges have historically preceded significant bond selloffs, raising concerns about a potential market correction. Events like December employment data and geopolitical tensions have failed to shift yields significantly.
Metrics beyond weekly ranges highlight this low volatility, with the 10-year note's rolling one-month range being in the 99th percentile of readings since 2000. This contrasts sharply with other markets like oil and stocks, where price swings are fierce, underscoring the peculiar stillness in interest rate futures.
