U.S. Mortgage Bond Markets Liquid Despite Low Volumes: N.Y. Fed

The market for U.S. government mortgage-backed securities remains deeply liquid despite signs that trading conditions have weakened, according to researchers at the Federal Reserve Bank of New York.

The difference between MBS bid and ask prices, which is known as a spread and is considered one of the most direct measures of liquidity, has been relatively stable since 2011 when the Financial Industry Regulatory Authority first began tracking the transaction data, researchers Rich Podjasek, Linsey Molloy, Michael Fleming, and Andreas Fuster wrote in the latest part of a series of reports aimed at assessing liquidity across financial markets.