Treasury Volatility Puts Lessons of March 2020 Squarely in Focus

Increased choppiness in Treasuries is focusing investors’ minds on just how well the market might respond to future episodes of large-scale selling like the one that took place in March 2020.

While bond markets around the world were impacted back then, conditions for US securities -- which form the bedrock of the international financial system -- “deteriorated disproportionately” in the face of the pandemic-induced crisis, according to a Liberty Street Economics blog post authored by members of the Federal Reserve Bank of New York’s markets and research groups.

The centrality of the US currency within the global financial system was ...