The impact of the coronavirus outbreak on Wall Street may worsen trading conditions for one of the world’s most liquid and important assets: U.S. Treasuries.
So say strategists at JPMorgan Chase & Co., who warn that overwhelmed dealer-banks in an extreme scenario could be flooded with an extra $200 billion worth of U.S. government debt as market participants rush to secure extra financing. That could then challenge the repurchase market, a vital part of the financial system’s plumbing, just months after the Federal Reserve was forced into actions to support it.
