Fed's Drop of Forward Guidance Leads to Higher U.S. Rate Volatility -- Market Talk

0623 GMT - The Federal Reserve's withdrawal of forward guidance is ushering in structurally higher U.S. rates volatility which is also impacting other developed-market bonds, BNY's David Tam says in a note. The MOVE index--a key measure of Treasury-market volatility--has strong historical correlations with non-U.S. sovereign bond yields and points to a clear cross-border transmission mechanism, he says. Developed-market sovereign bonds are particularly exposed. "Their tighter integration with U.S. rates means a rising volatility environment could lead yields to spike and trigger a selloff," he says. (emese.bartha@wsj.com)

(END) Dow Jones Newswires

July 31, 2026 02:23 ET (06:23 GMT)