The Treasury bond market crashed violently after the election, and the carnage may not be over.
Not exact matches
Since the
bond market's «flash
crash» back in October — when US 10 - year
Treasury yields fell 34 basis points, or 0.34 % in one morning — concerns regarding liquidity and how resilient the
bond market might be to shocks have lingered around the
market.
In the next section, we first contextualize and explain our hypothesis as to how an increase in the number of mini flash
crashes in equity
markets could have contributed to the October 2014 U.S.
Treasury Bond Flash Crash.
We also explain how an increase in the number of mini flash
crashes in equity
markets from 9:30 to 9:33 on October 15, 2014 could have contributed to the October 2014 U.S.
Treasury Bond Flash Crash.
U.S. asset
markets have experienced four other major flash
crashes, in addition to the October 2014 U.S.
Treasury Bond Flash Crash.
We investigate the causal uncertainty surrounding the flash
crash in the U.S.
Treasury bond market on October 15, 2014, and the unresolved concern that no clear link has been identified between the start of the flash
crash at 9:33 and the opening of the U.S. equity
market at 9:30.
The general importance of reducing causal uncertainty surrounding other historic flash
crashes is similar to the importance of reducing causal uncertainty surrounding the October 2014 U.S.
Treasury Bond Flash Crash: causal uncertainty threatens to erode trust in
markets and impedes action to prevent similar events from occurring in the future.
Future analysis done in relation to the October 2014 U.S.
Treasury Bond Flash Crash should be done on mini flash
crashes in other U.S.
markets, especially on mini flash
crashes in derivatives
markets (since derivative
markets exhibit more cross-market interconnectedness than other
markets), and on mini flash
crashes on the other public stock exchanges.
In this article we find a statistically significant increase in the number of mini flash
crashes in equity
markets in the moments leading up to the October 2014 U.S.
Treasury Bond Flash Crash.
Regulators can implement policies to monitor mini flash
crashes proactively and, among other preemptive actions, limit mass liquidity flights from one
market to the U.S.
Treasury bond market during instances of heightened instability.
While XLP and SPHD are more focused on limiting bear -
market downside while providing some bull -
market upside, the iShares 1 - 3 Year
Treasury Bond ETF is a much purer
crash - proof ETF.
On October 15, 2014, in a related development, there was a flash
crash in the
market for U.S.
Treasury bonds.
And when the stock
market crashes, investors tend to run to
bonds and
treasuries, which causes prices to go up and
treasury yields to drop.
They teach very little (nearly none) about securities
markets and stock behaviour to economists, and that is largely restricted to the history of the various
market crashes and a great deal about what the central banks and
Treasury dept. do with
bonds and interest rates.