India, Sept. 17 -- US 10-year Treasury yields have climbed to 5%, but the bond market has not seen a similar jump in volatility. Options traders are expecting relatively limited movement in 10-year Treasury rates, even after the benchmark yield reached 5%. Three-month options on 10-year rates are currently pricing around 79.5 basis points of annualised volatility.

That level of expected volatility is much lower than in October 2023, when 10-year Treasury yields last approached 5%. At that time, three-month options were pricing around 134 basis points of volatility, according to Reuters. The difference shows that investors are currently less nervous about the rise in Treasury yields than they were when yields approached the same level in ...