If the events of 2007 and 2008 taught the market anything, it is how quickly liquidity can disappear when panic sets in. Even as the credit markets wrestle with the implications of the current central bank-induced surfeit of liquidity, many are becoming increasingly concerned about how that liquidity will react when interest rates eventually rise.
“The market was in a high state of alert about funding rates increasing in April to May and October to November last year.
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