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Near-Disaster in U.S. Treasuries Lights a Fresh Fire for Reform

  • Focus is on moving more trades to central clearing venues
  • Fed may need to play more regular role if changes aren’t made

The U.S. Treasury market’s brush with disaster in March has reawakened calls to overhaul the underpinnings of the almost-$21 trillion cornerstone of the global economy and ease pressure on the Federal Reserve to step in with massive lifelines.

Bond liquidity vanished nine months ago as investors panicked about the pandemic and stopped trading, forcing the central bank to pick up the slack and buy debt at an unprecedented speed and scale to get the business functioning smoothly again.