The Merrill Lynch Option Volatility Estimate index, which tracks the implied volatility of one month options on different Treasury bonds, has fallen to levels last seen in mid-1998.

Can the peace calm? There is no clear reason why it should end soon. As Alan Greenspan underlined in his comments about the bond market “conundrum”, longer-term yields have proved largely immune to changes in monetary policy.

While short rates have risen sharply in the past two years, 10-year yields are broadly flat. Monetary policy under Ben Bernanke is likely to become more transparent. So even though rates are potentially nearing an inflection point, that need not necessarily mean that markets will get caught off guard.

And certain technical factors that help underpin demand for Treasuries, such as liability matching for pension funds, will continue.

However, there are risks. If the US economic data shift decisively, for example with a spike in inflation, that would break investors’ complacency. Alternatively a sudden deterioration in the outlook for US growth could have a similar effect.

If history is any guide, a shock could equally come from abroad. Anything that triggered a rethink by overseas investors on the attractiveness of US assets could cause a rapid rebound in volatility in the Treasury market.

Such events are very tough to predict. But they happen. Last time things were this sleepy, there was a rude awakening when the Russian default sent markets into a tailspin.