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Nightmare on Wall Street Was All About Liquidity

  • Stresses everywhere as virus triggers unprecedented repricing
  • Havens stop performing as investors, companies hoard cash
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Prudential's Krosby Says Wild Week Shows Markets Reaching 'Panic Level'

Ian Burdette stared at his computer screens on Thursday afternoon in New York and could hardly believe his eyes. Everywhere that the head of term-rates trading at Academy Securities Inc. looked, there were massive anomalies and signs of unprecedented stresses in markets.

Ultra Long Term U.S. Treasury Bond Futures, which moved about 1.3 points per day on average in January, were down more than seven points on the day and off 36 points from Monday’s high. Italian sovereign debt had simply imploded. An index of costs to insure corporate debt with credit-default swaps surged the most since Lehman Brothers collapsed, and the CBOE Volatility Index measuring costs to hedge against losses in U.S. stocks was the highest since November 2008.