On Tuesday, the ICE Bank of America MOVE index, which measures 30-day implied Treasury volatility, rose to its highest level since the market crashed at the beginning of the pandemic in March 2020. The reason for the high bond volatility is the dueling concerns of the Federal Reserve raising rates and the resulting fear that this will lead us into a recession. The Fed has committed to aggressively raising rates to contain rampant inflation. This has pushed yields higher amid a massive bond sell-off. The concern over a recession stem from the early 1980s when Fed Chairman Paul Volcker aggressively tightened monetary policy to get control of rising consumer prices. Bond volatility is likely to remain until we have a better idea of how the economy responds to the rate increases.

Finsum: With the Fed aggressively raising interest rates, concerns over a recession have led to massive volatility in the treasury markets.