US Treasury market liquidity back to pre-Fed tightening levels, says NY Fed

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NEW YORK, Sept 23 - Liquidity in the $27 trillion U.S. Treasury market, the largest government bond market in the world, is back to levels seen before the Federal Reserve started hiking interest rates in 2022, according to a New York Fed report.

Bank of New York’s Research and Statistics Group, said in a post on the New York Fed's Liberty Street Economics blog on Monday. Finally, Fleming observed an improvement in the price impact of trades, which assesses the price change that occurs when a buyer or seller begins a trade. After rising sharply during the March 2023 banking turmoil, price impact has been declining to levels last seen in late 2021 and early 2022, he said, before rising again in early August 2024.

However, a proxy for Treasuries liquidity that measures deviations between certain Treasury yields has kept deteriorating, he added.

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US Treasury market liquidity back to pre-Fed tightening levels, says NY FedLiquidity in the $27 trillion U.S. Treasury market, the largest government bond market in the world, is back to levels seen before the Federal Reserve...
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