Forget Default: Deutsche Reckons Debt Market Risk Lies Elsewhere
- Focus on liquidity has transformed principles of bond market
- Deutsche estimates $2 trillion of duration in mutual funds
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What’s in a word? A lot when it comes to the term “liquidity.”
For years, academics, investors and regulators have sparred over the meaning of liquidity, and the degree to which it’s said to have deteriorated in the marketplace. For many, it’s simply the ability to sell an asset without significantly affecting its price. To others it’s the hallmark of a healthy market, or the symptom of a disease brought on by “easy money” provided by central banks in the years since the financial crisis.