Analysts note that the drop in volatility reflects market adaptation to the new rate environment, as investors have largely priced in the Fed’s tightening cycle and shifted toward longer-term positioning. Stabilization in bond volatility is also seen as a key prerequisite for broader risk appetite, supporting equities, credit markets, and alternative assets.

At the same time, experts warn that low volatility does not eliminate risk: high debt levels, large Treasury issuance, and sensitivity to macro surprises mean that bond markets remain vulnerable to sudden repricing if inflation or monetary policy expectations change.

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