Brian Chappatta, Columnist

Treasury Liquidity Dries Up. Fed Makes It Rain.

Primary dealers describe the world’s biggest bond market malfunctioning to an alarming extent.

March 12, 2020 at 5:38 PM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Calling Dr. Fed.
Photographer: Jason Alden/Bloomberg

Provide news feedback or report an error

Site feedback:

Take our Survey

This article is for subscribers only.

On Tuesday, I published a column with the headline “U.S. Treasuries Are Not Supposed to Trade Like This.” It showed that since the federal government began issuing 30-year bonds in the 1970s, yields had never whipsawed as much as they did in the previous three trading sessions.

I thought I had the reasons figured out. The Federal Reserve would cut its key lending rate to zero in short order? That’s still the base case. Foreign bond buyers are panic buying? Indeed, Japanese investors just bought a record amount of overseas bonds. A recession seems likely? It sure does.