There is some buzz about massive market liquidity followed by periods where it completely vanishes.
Yesterday’s bond trading was a perfect example. The offer in bonds completely collapsed after retail sales yields plunged 15 basis points in minutes only to completely rebound shortly afterwards.
Just hours later, at 2 pm ET, just after the Beige Book, nearly $1 trillion in bond trades went through in the largest volume of trading to ever hit the bond market.
No liquidity to ultra liquidity
The intraday change says something dramatic about over-regulation and high-frequency trading — we’re just not sure what it is.
What it does do is add another splash of uncertainty to a market where nerves are frayed.
