Parabolic Volatility in the Bond MarketYield Rates represent a percentage. How much would an investor get if they invested in a US Treasury Bond.
A stable economy needs three things, at least according to the FED.
- Low Inflation
- Low Unemployment
- Strong Economy
Yield Rates are the ultimate weapon of the FED. By manipulating rates they stabilize the economy accordingly. They stimulate when they should, and they calm as needed.
A strong economy is a stable economy. Volatility in markets is bad juju.
Stability in yield rates is a matter of survival.
But it seems that we have failed in that.
The average rate-of-change in yield rates has gone parabolic over the decades.
And we are talking about 100 years. The bond market is currently in a whipsaw.
The rate / percentage yields oscillate is beyond comprehension.
Who knows what effects this will have in the years to come.
A similar picture prints in FEDs mind right now.
In absolute yield-rate terms, the average-true-range of rates has formed a bull flag.
Once again this confirms the beginning of the 1960s stagflation.
Tread lightly, for this is volatile ground.