There has been major disruptions in Treasury market liquidity, with it being very difficult to sell off-the-run bonds. My initial reaction to these stories is that this is the typical complaining you get from people in any overly-specialised field when something slightly atypical happens. My argument is the worst case interpretation is that this is a reaction to one or major entities' balance sheets blowing sky high. Alternatively, this is just what happens when too many people take finance academics too seriously, and build their entire business model around the premise of markets always being liquid and orderly 24/7. That was always a stupid assumption, and so this is just reality intruding on that fantasy.
As a disclaimer, I am basing my comments solely upon the chatter I see in media reports. My feeling is that we are seeing a repeat of similar trading patterns from the Financial Crisis, and I am extrapolating from that experience....Bond Economics
Treasury Market Turmoil At Most A Symptom
Brian Romanchuk
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