US Bond Markets Stabilise After Volatile February

After a wild ride in early February, bond market volatility has decreased

Dave Sekera, CFA 27 February, 2018 | 2:26PM
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Federal Reserve is expected to raise interest rates

Bond market activity returned to normal at the end of February after a wild ride early in the month. Changes in interest rates and credit spreads – the difference between quality and high-yielding bonds – were muted, and the decrease in volatility led to more new issues in the marketplace. 

The yield on the two-year Treasury note rose 5 basis points or 0.05% to end the week at 2.24%, just below its highest level since September 2008. Meanwhile, longer-term bonds were barely changed: the five-year Treasury note decreased one basis point to 2.62% and the yield on the 10-year Treasury bond was unchanged at 2.87%. The yield on the 10-year bond traded within close to the 3% psychological barrier earlier in the week before retracing lower as investors took advantage of the higher yield and pushed it back down.

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About Author

Dave Sekera, CFA  is a senior securities analyst with Morningstar.