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The Liquidity drought in the Treasury market is accompanied by an unexpected meeting

The trading situation in the $ 22tn market of the US government has begun to be hospitable, adding to the security instability that forms the basis of global economic governance.

Liquidity – the ease with which a retailer can buy or sell goods – has deteriorated in recent weeks, data demonstrations. This has added to the pressure on regulators to develop a market that is seen as a refuge during times of crisis.

But regulators are far from any answer, according to a recent report released this week by the federal body overseeing the US Treasury bond market.

The reports, part of a comment sent after the Treasury markets were thrown into chaos at the beginning of corona virus epidemic, in particular, about the financial crisis in recent years. It also outlined some well-known methods such as multiplication and monitoring and abortion.

It stopped making any thought ideas and did not specify the time for the project, however.

“The report does not go far enough to support the stability of the Treasury market and to ensure that investors continue to sell when things go awry,” said Yesha Yadav, a professor at Vanderbilt Law School who studies Treasury markets.

The report came at a time when the economy was deteriorating. Demand for Treasury Loans has risen sharply in recent days, prompting 30-year bond prices to rise sharply since July. The cost of a 10-year benchmark bond has risen sharply since September.

The current rise in prices is contradictory. The Fed last week announced plans to reduce Treasuries purchases during the epidemic, which meant the departure of a major buyer from the market. There is no clear economic reason why the need for security of the site should rise sharply at this time: October US performance report showed significant growth in employment, as well as risk factors such as goods is increasing.

“This is seen as something that should send a disturbing signal to central banks, because it is not really managed. It is clear that there are” responsibilities “going on when we speak,” said Subadra Rajappa, US chief of staff at Société Générale.

This “release” means that forecasters are rushing out of the bet so that the Treasury’s highest prices could fall. The trade has been popular in recent months, but continuous price fluctuations have declined hedge funds including Rokos Capital Management, Alphadyne Asset Management and Odey Asset Management.

As investors move out of the bearish areas, the amount of money has become more and more common, which is making the move even more volatile. A JPMorgan Chase survey from November 5 showed that the depth of the market, by one level of money, had dropped dramatically since then. summer, while fears related to the effects of the Delta divergence on the US economy blocked water.

Another way to measure the amount of money is to look at the yield differences between recently released security – a 10-year record released in August that is usually liquid – and old security that often sells less. This spread has been on the rise for the 10-year-old Treasuries since late October.

Liquidity problems have been contributing to recent price movements, says Kevin McPartland, head of market design research at Coalition Greenwich. You can see it until October. You can see it today, ”he said.

McPartland also said that the ICE BofA Move index, which targets volatility in the Treasury market, remained high last week after reaching the highest level since the coronavirus market began to shake in March 2020.

“There is a lot of uncertainty because there is a lot of uncertainty. And the economic crisis goes hand in hand with this,” said Kristina Hooper, a senior global marketing expert at Invesco US.


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