Given the growing scarcity of available collateral
among bond dealers, a collapse in repo liquidity, and increasing frequency of delivery failures, all of which is shorthand for a bond market that is becoming less liquid — it seems that QE has begun to create, rather than relieve, meaningful constraints.
Each day these
dealers, on average, trade about $ 700 billion of
bonds (including Treasury, government agency, corporate, and municipal
bonds) with clients, and billions more in trades
among themselves.