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Featured Article

06 AUG 2020

Bond Trading: Setting Recent Volatility in Context

By Owain Johnson

  • 6 Aug 2020
  • By Owain Johnson

Executive summary

The US Treasury bond complex experienced extremely high levels of volatility in March 2020 as the consequences of the COVID-19 virus impacted on the US and global economies. In terms of outright bond prices, observed intraday volatility was the highest in recent years, although intraday moves were not generally as large as those seen during the financial crisis when measured in yield terms. The cost to trade rose in March but by a lower rate than might have been expected, given the significantly higher intraday volatility. It was also noteworthy how quickly the bond market moved back into its normal trading range, despite ongoing uncertainty around the economic impact of COVID-19.

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The cost to trade rose in March but by a lower rate than might have been expected, given the significantly higher intraday volatility.