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Fed Warns of Worsening Market Liquidity in Stability Report

  • Risk of sudden liquidity deterioration ‘higher than normal’
  • ‘Notable dysfunction’ seen in commodity markets amid war: Fed
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Fed's Bostic on Rates Path, Market Volatility, Economy
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The Federal Reserve warned of deteriorating liquidity conditions across key financial markets amid rising risks from the war in Ukraine, monetary tightening and high inflation in a semi-annual report published Monday.

“According to some measures, market liquidity has declined since late 2021 in the markets for recently-issued U.S. cash Treasury securities and for equity index futures,” the U.S. central bank said in its Financial Stability Report.