Bond traders face week that threatens to shatter any market calm

Bond traders face week that threatens to shatter any market calm

Bloomberg / New York

It’s been a volatile time for the Treasuries market – and the coming week will almost certainly be no exception. Traders in the world’s biggest bond market are bracing for another round of price swings driven by a Federal Reserve meeting, the Treasury Department’s quarterly debt-sales announcement and the continuing global economic uncertainty that’s fuelling large moves in the foreign-exchange market.

The Fed is widely expected to raise its key rate by half a percentage point when it concludes its two-day meeting Wednesday, which would mark the biggest upward move since 2000. But traders will be closely watching Chair Jerome Powell’s press conference for more clues on just how high he thinks rates need to go to tamp down inflation.

That will follow the Treasury Department’s quarterly refunding announcement the same day, which will detail the size of future bond auctions just as the Fed is preparing to pull support from the market by not buying new securities when some of its holdings mature. On Friday, the Labor Department will release its monthly jobs report – a crucial, market-moving gauge of the nation’s economic growth and the wage pressures fuelling inflation.

The confluence threatens to make