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Strains in US government bond market rattle investors
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The US government bond market has come under strain during this week’s financial market tumult, prompting calls from analysts and fund managers for decisive action by the Federal Reserve to prevent a bigger calamity. Banks and investors have said that trading conditions in Treasuries, the world’s biggest and deepest debt market, have deteriorated in the past few days. The market became “overwhelmed by liquidity concerns” during a chaotic day on Wednesday, said Bank of America analysts in a note to clients. “[This] could stop the Treasury market from functioning. If that happens it is a national security issue. It will limit the ability of the US government to respond to the coronavirus,” said Mark Cabana, a BofA strategist who authored Thursday’s report.