Why are bond traders so fearful? One thing is sure, bond volatility is very important going forward, especially as it has diverged from equity volatility over the past weeks.
Bond volatility, MOVE index, has refused to "Buy" the latest squeeze in SPX and we are seeing a rather big divergence here.
We have seen both bond and oil volatility rise sharply since the CPI print, while the "Rebel", VIX, has moved sharply lower.
Equities have realized rather low volatility and a lot of year end macro uncertainty has faded, but when the vols of "The economy" rise this much and VIX continues crashing, you pay close attention and start planning hedges.
Volatility has mean reversion tendencies, so trending volatility over longer time periods is rare.
Maybe MOVE is not ready for new highs, but the US 2/10 vs MOVE tells you a lot.
The extreme expansion of Fed's BS destroyed bond volatility.
https://www.zerohedge.com/economics/california-mulls-ban-all-gas-and-diesel-truck-fleets
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