Financial Times/Kate Duguid and Tommy Stubbington/11-14-2022
“For most analysts, the liquidity problems in the Treasury market are not just about rapidly changing prices, they are also a reflection of a dearth of buyers, or an inability or unwillingness of the buyers in the market to mop up all the supply.”
USAGOLD note 1: That dearth of buyers is the result, for the most part, of both the Fed and the Bank of Japan withdrawing from the Treasuries market as buyers. Those cracks, in short, could easily become major fractures, unless buyers are found elsewhere.
USAGOLD note 2: As FT points out, in the event of another crisis the Fed would likely put a halt to quantitative tightening or even return to quantitative easing as did the Bank of England under similar circumstances a few months ago. Such a retreat from stated policy, though, would not communicate “the kind of stability and security that investors around the world depend on,” says FT.
