New Delhi, May 22 -- Rising volatility in the US bond market has become the first major challenge for incoming Federal Reserve Chairman Kevin Warsh, according to a report by Jefferies.

The report stated that the "stress test" for the new Fed chairman has effectively begun after the US 10-year Treasury bond yield sharply crossed the 4.5 per cent mark last week amid rising inflation concerns and growing volatility in financial markets.

The US 10-year Treasury yield increased from 4.31 per cent on May 7 and 4.43 per cent last Thursday to a recent high of 4.685 per cent on Tuesday. The yield was later trading around 4.60 per cent.

The report also highlighted a sharp rise in bond market volatility, with the MOVE Index climbing from 69.6 las...