How do you solve a problem like US Treasuries?

How do you solve a problem like US Treasuries?

The wild markets of March 2020 revealed the capacity for severe dysfunction in what should be the soundest market of all – US treasury bonds. Can any market be expected to cope with such conditions without extraordinary help?

January 28, 2021

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CAPITAL MARKETS

ETFs, portfolio trades keep corporate debt liquid

When the panic of March 2020 hit, did corporate debt fare better than Treasuries?

Mark Baker, January 28, 2021

In normal times the Federal Reserve Bank of New York publishes a monthly breakdown of its purchases of US treasury securities, showing the quantity of every single bill and bond bought. And in normal times, the spreadsheets it produces would hardly be riveting.

But March 2020 was very far from normal, and the Fed’s spreadsheets began to look decidedly odd.

The world’s financial markets, taking their lead from the US, were wilting. As economies began to shutter and all manner of participants scrambled to liquidate anything that could generate dollars, the most liquid part of the market – US treasury bonds – was beginning to buckle.

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Capital Markets Regulation United States North America Features February 2021

Mark Baker

Deputy editor

Mark Baker is deputy editor. Prior to joining Euromoney magazine he was based in Hong Kong as managing editor, Asia, for the Capital Markets Group. He previously edited EuroWeek magazine and was also deputy editor at International Financing Review.