Bond Markets Are Suffering from Rising Volatility and Price Moves, as Central Banks lift rates and threaten Quantitative Tightening to try to tame raging inflation. And the word “crisis” is not hyperbole. Liquidity is quickly evaporating. Volatility is soaring. Once unthinkable, even demand at the government’s debt auctions is becoming a concern. Conditions are so worrisome that Treasury Secretary Janet Yellen took the unusual step last Wednesday of expressing concern about a potential breakdown in trading, saying after a speech in Washington that her department is “worried about a loss of adequate liquidity” in the $23.7 trillion market for US government securities.
Make no mistake, if the Treasury market seizes up, the global economy and financial system will have much bigger problems than elevated inflation.
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