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Treasuries Liquidity Problem Exposes Fed to ‘Biggest Nightmare’

  • JPMorgan measure of Treasury-market depth continue to plunge
  • Bloomberg’s gauge of how far yields are from fair value rising
Updated on

The latest bout of global financial volatility has heightened concerns about regulators’ continuing failure to resolve liquidity problems with US Treasuries -- the debt that serves as a benchmark for the world.

It’s getting harder and harder to buy and sell Treasuries in large quantities without those trades moving the market. Market depth, as the measure is known, last Thursday hit the worst level since the throes of the Covid-19 crisis in the spring of 2020, when the Federal Reserve was forced into massive intervention.