Volatility in the U.S. bond market has picked up in February as expectations for a withdrawal of central bank stimulus collide with haven bids amid escalating tensions in Ukraine. Treasuries had recorded their worst start to a year in four decades after the Fed accelerated plans to rein in inflation by tightening policy.
“We expect Treasury yields to have downside risk while the Ukraine situation rumbles on and the pull of safe haven assets dominates,” said Martin Whetton, head of fixed-income and foreign-exchange strategy at Commonwealth Bank of Australia. “Any resolution should shift the narrative back toward rate hikes and take yields back over 2%, though we expect the broad range to hold.”
--With assistance from Ruth Carson, Greg Ritchie, James Hirai, Liau Y-Sing and Neha D'silva.
This article was provided by Bloomberg News.