When the world’s biggest debt market starts having major liquidity issues, investor panic rises to a whole new level. On March 12 and 13, after about a week of extraordinary dysfunction in the US Treasury market, the Federal Reserve issued a major crisis response, expanding Treasury purchases and repurchase operations to boost liquidity and shore up so-called risk-free assets.
We all knew volatility couldn’t stay low forever, even with solid global growth and low inflation. Rising volatility is common in the late stage of the economic cycle, and negative headlines have been dominating market sentiment.
