The market is in a "sleeping" state! The volatility of the 10-year US Treasury yield hits a record low, leaving investors anxious about the possibility of breaking through certain levels.

Note that the yield on the 10-year US Treasury bond is heading towards maintaining a slight fluctuation for the fifth consecutive week, approaching the longest "inertia period" record in the past twenty years. Since 2006, the median weekly fluctuation range of the 10-year US Treasury bond yield has been 16 basis points. However, in the past five weeks, this range has been less than 10 basis points, marking the longest such trend since 2020. This trend is mainly due to market expectations of stability in US monetary policy, but it is causing anxiety among bond market investors because previous narrow yield fluctuations have typically been followed by sell-offs. Ian Lyngen, interest rate strategist at BMO Capital Markets, observed in a report that since mid-December, the 10-year US bond yield has fluctuated between 4.1% and 4.2%. This range has withstood various risk events including December employment data, actions taken by the US Department of Justice against Fed Chair Powell, and expectations of US military action against Iran. During early Asian trading hours on Friday, the benchmark yield remained at 4.16%. "Investors have been pondering what catalysts are needed to push the 10-year yield to 4.25% or bring it down to 4.05%," Lyngen wrote. "We must caution that historically, when this narrow range is ultimately breached, it often evolves into a bearish bond market event." In September and October 2020, the 10-year yield remained between 0.64% and 0.8% for six consecutive weeks. Subsequently, with the rollout of the COVID-19 vaccine signaling economic recovery and the formation of federal infrastructure spending plans, the yield more than doubled over the next four months. At that time, due to the very low level of the 10-year yield, even small changes had a greater impact than now. Other methods of measuring low volatility in the bond market include a one-month rolling volatility range of 10-year Treasuries, which is currently only 8 basis points, at the 99th percentile since 2000. In addition, interest rate futures options prices are also at low levels. "While oil, stocks, and precious metals are volatile, interest rate futures are locked in place," wrote Alex Manzara, a derivatives broker at R.J. O'Brien & Associates, in a client note on Thursday. When the Federal Reserve begins the rate hike process in 2023, the volatility range reflected in a one-year short-term interest rate futures contract spread pricing is approximately 100 basis points. Currently, similar contracts reflect a volatility range of only about half that.