Does the Federal Reserve have an arsonist firefighter side? The US central bank is concerned about the risks associated with the deterioration of liquidity in the financial markets, ie the ease of buying or selling a financial asset without disproportionately influencing its price. The situation has deteriorated since the end of last year and could get even worse, the monetary institute warned in its semi-annual report on financial stability.
“According to several indicators, liquidity has declined since the end of 2021 in the markets for new issues of Treasuries [obligations d’Etat américaines, NDLR] and on futures on major stock indices,” the Federal Reserve points out. These two markets are among the largest and usually the most liquid in the world. “The risk of a sudden and significant deterioration in liquidity seems higher than in normal times”, she worries, with the key, “even more volatile prices and market anomalies”.