Deutsche Bank sees 'baby tantrum' for US Treasuries

New York

ENJOY the holiday slowdown, bond traders. If analysts at Deutsche Bank AG are right, the market is going to get a lot more volatile.

After the Federal Reserve succeeded in nudging borrowing costs up from near zero last week in its first interest rate increase since 2006, Treasury yields have hardly moved. Now, traders are betting low inflation and slow global growth will encourage policy makers to raise rates slowly in 2016.

The lull won't last, according to Dominic Konstam, global head of rates research for Deutsche Bank in New York. He predicts the Fed will catch bond traders wrongfooted by raising rates in March. That may prompt a smaller version of the market "tantrum" seen in 2013, when the prospect of …