November 17, 2021

Bond traders: Taper-talk roadmap revives volatility in bond market

Bond investors are confident that the calm engulfing the Treasury market for months will have a limited shelf life.

A report on May job growth that disappointed some traders did spark a burst of short-covering Friday. But it left intact speculation that the U.S. recovery from the pandemic is strong enough to lead the Federal Reserve to finally start discussions this month around the idea of tapering its massive bond-buying program.

No policy move is expected at the June 15-16 Fed gathering. The options market is coalescing around an actual shift — with the potential to bust yields out of their volatility-killing range trade — in August. That’s when the Fed traditionally holds its annual meeting in Jackson Hole, Wyoming, which has served as a venue in the past for important policy signals.

“The Fed at least will acknowledge that they have moved out of the…

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