"The inventories of US corporate bonds held by broker-dealer banks have plunged from $300bn in 2008 to $50bn, according to research from CQS."HFT is not healthy liquidity. All liquidity is volatile and susceptible to temporary withdrawal in the face of uncertainty. However, HFT is at the extreme of this: machines are turned off, orders are temporary. Investment bank liquidity tends to be more permanent and stable.
This blog is mainly a personal storage site for articles and papers that interest me. They will mainly be about financial markets, current policy issues and articles that relate to these topics. Have fun!
Sunday, May 03, 2015
Bond market liquidity
Healthy liquidity diet needed to survive future financial shocks: 'Healthy' means ample liquidity. That requires speculation.
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