Navigating Volatility in the Treasury Market for Maximum Returns

The historically stable $24 trillion Treasury bond market experienced unprecedented volatility in March, with daily moves in the 2-year yield averaging about 50 basis points. Fears of instability in the US banking system and poor liquidity were likely culprits. The Federal Reserve responded by rolling out an emergency facility for banks to tap for liquidity. Concerns about the banking system were subsiding by the end of March, with US stocks posting monthly gains. Traders in fed-funds futures are slightly favoring another Fed rate hike in May.