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MNI INTERVIEW: Reforms Aid Brittle Treasury Market-SEC Ghamami

(MNI) WASHINGTON

Increased central clearing will help in the longer-run while the Fed's QT pullback should alleviate short-term pressures, says SEC economist.

The U.S. Treasury market remains vulnerable to bouts of illiquidity that could rattle financial markets, though reforms like increased central clearing should help alleviate more severe pressures, Securities and Exchange Commission economist Samim Ghamami told MNI.

“It is not unlikely to see at least mild illiquidity episodes in the Treasury market in the future,” Ghamami told MNI’s FedSpeak Podcast. “Liquidity in Treasury markets continues to remain low by historical norms, mostly due to high interest rate volatility.”

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The U.S. Treasury market remains vulnerable to bouts of illiquidity that could rattle financial markets, though reforms like increased central clearing should help alleviate more severe pressures, Securities and Exchange Commission economist Samim Ghamami told MNI.

“It is not unlikely to see at least mild illiquidity episodes in the Treasury market in the future,” Ghamami told MNI’s FedSpeak Podcast. “Liquidity in Treasury markets continues to remain low by historical norms, mostly due to high interest rate volatility.”

Keep reading...Show less