The Fed’s Next Crisis Is Brewing in US Treasuries

 Liquidity is quickly evaporating. Volatility is soaring. Once unthinkable, even demand at the government’s debt auctions is becoming a concern. 

Treasury Secretary Janet Yellen took the unusual step Wednesday of expressing concern about a potential breakdown in trading, saying after a speech in Washington that her department is “worried about a loss of adequate liquidity” in the $23.7 trillion market for US government 

securities. Make no mistake, if the Treasury market seizes up, the global economy and financial system will have much bigger problems than elevated inflation. 

Whereas quantitative easing, or QE, injects liquidity into the financial system through bond purchases, QT has the opposite effect. 

Instead of selling bonds, the Fed is allowing the $9 trillion or so of US Treasuries and mortgage securities it has accumulated on its balance sheet since the 2008 financial crisis to mature without replacing them. 

Robert Burgess Bloomberg 14 oktober 

https://www.bloomberg.com/opinion/articles/2022-10-14/fed-s-next-crisis-is-brewing-in-us-treasuries

Robert Burgess is the executive editor of Bloomberg Opinion.

US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

Niall Ferguson, FT 10 February 2010

https://www.internetional.se/bondsnext.htm