Today, the Committee released the Nothing But the Facts Statement on U.S. Bond Market Liquidity. The statement provides data on the recent increase in the size of these markets and the relative shift in holdings away from traditional broker-dealers and towards bond investment funds. It describes several of the concerns with this shift.
The statement then reviews various measures of bond market liquidity, finding that certain measures indicate that these markets remain highly liquid, whereas others show signs of deterioration. The Committee notes that while these measures are effective at capturing the liquidity of these markets at present, they do not provide insight as to the likelihood or severity of a future liquidity shock.
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