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Bond Market Rises to Liquidity Challenge – Bloomberg Gadfly


In some ways, the $40.7 trillion U.S. bond market just passed an important test: It demonstrated that it could account for rapidly shifting views without breaking down.

This is significant because the Federal Reserve, big banks and investors have spent hundreds of hours studying the health of markets that help determine borrowing costs for consumers, companies and governments. The big fear has been that the infrastructure underlying these debt transactions has been hobbled by new regulations and a lack of modernization, resulting in an inability for investors to act on quick changes in sentiment.

But traders seemed to do just fine this month despite a significant disruption in the status quo.  Read More…