Technical Analysis

Fed’s Brainard: Current macro environment raises risks of financial shocks

Comments in the Fed’s stability report

  • Treasury market has functioned smoothly since last report in May
  • Market liquidity remained low in several key areas and that could amplify volatiltiy and may ultimately impair market functioning
  • Economic outlook has weakened, uncertainty remains elevated

US regulators haven’t done enough to prevent air pockets in the bond market. The explosion in short-dated options trading is also something that’s obviously going to end in disaster at some point as well.

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