The best financial club in the world is breaking up. The 35 dealers in US Government securities are bracing themselves against a jostling rush of new, often foreign, members into their market. Election to the club is practically a formality even though several of the club's senior members-- Goldman Sachs, First Boston, Donaldson, Lufkin and Jenrette, Salomon Brothers and Citicorp--have already been upset by the exuberance of the Japanese applicants queuing at the door of the New York Fed.
The lure of the Treasury market is twofold. It's the biggest and most liquid securities market anywhere in the world. In a week in March the primary dealers alone were trading an average of $134 billion a day. No one kept a score of what everyone else was doing. The New York Fed once guessed that primary dealers accounted for only about half the total Treasury trading.
The Treasury market has also been pleasantly volatile, skipping around with the friskiness of an option. Prices in US Government debt can spurt and spin as much as 2 or 3% a day. Even the traditionally more speculative stock market can't match that. When the Dow Jones Industrial Average dropped 60 points or 3% in July, analysts were soon out in force to proclaim the end of the bull market in securities.