Markets conditions for U.S. Treasurys and other securities worsened earlier this year as investors awaited word on the Federal Reserve‘s bond-buying program, according to a Fed survey out Thursday.
“During the period of heightened market volatility beginning in May and extending into early July, dealers indicated that liquidity and functioning generally deteriorated across a number of fixed-income markets, including those typically perceived to be the most liquid and deep, such as the markets for U.S. Treasury and agency securities,” the Fed’s Senior Credit Officer Opinion Survey said.
The survey doesn’t mention the Fed’s easy money policies, and other factors also were likely at play in markets during the time period.
But in May the central bank signaled it could start to wind down its $85 billion-a-month bond purchase program, creating uncertainty across markets. Fed officials surprised investors last month when they decided to continue the program unchanged while determining the direction of the economy and fallout from rising interest rates.
The quarterly survey queried credit officers in a series of special questions related to Treasurys, Treasury inflation-protected securities, or TIPS, high-grade corporate bonds, high-yield corporate bonds, and agency mortgage-backed securities.
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