Bond investors have taken a chill pill. Measures of Treasury bond market volatility have plunged this year and are approaching levels not seen since before May 2013, when the Federal Reserve first hinted it would reduce its $85 billion in monthly bond purchases, according to data compiled by Bloomberg. The relative stability of government bond prices underscores the strides Fed officials have made in reassuring investors that it will not immediately begin raising rates after ending its bond purchases. After reaching a 29-month high at the start of the year, yields on 10-year Treasuries have retreated as new Fed Chair Janet Yellen pledged to maintain her predecessor Ben Bernanke's tapering policy in "measured steps" and keep borrowing costs low to spur economic growth. "Bond markets understand that Bernanke and now Janet Yellen are talking from the same song sheet," says Neil MacKinnon, a strategist at VTB Capital and former U.K. Treasury official.
展开▼
