Wall Street Webcasting presents exclusive video of Rich Gordon, the highly regarded Fixed Income Market Strategist of Wells Fargo Securities (NYSE:WFC). This week, Gordon explains the lack of liquidity that has been portrayed in the fixed-income markets recently.

On October 15, 2014, there was a remarkable movement in the market which stimulated the inadequacy of liquidity in the fixed-income markets. The 10-Year Treasury began the day at just below 2.20%. After several disappointing economic reports, which included a deflationary reading on PPI, bonds rallied tremendously. What made this occurrence extraordinary, is that it persisted until the 10-Year Treasury fell to 1.86%, then backtracked to close the day at 2.13%; only 6 basis points under where it started the day.

Once the 10-Year Treasury got inside of 2%, any price resistance seemed to collapse, and the next 14 basis points happened in a matter of minutes. This is consistent with a Bloomberg article that elucidated about how some treasury dealers stopped posting 2-sided electronic markets as volatility spiked. This is also consistent with what happened in the “flash crash” back in 2010, when the Dow fell more than 1,000 points before recovering in just a few minutes.

Electronic trading may, in fact, make markets more efficient. However, would it really make that market comprehensively more liquid? If markets become completely one-sided as volatilities sharply increase, that seems like the exact portrait of an illiquid market. Treasuries are now part of an asset class that make investors question whether or not liquidity will be available to them when really needed.

To hear a more in depth explanation of the fluctuation in liquidity and the effect that this is having on investors’ decisions, please tune into Wells Fargo Securities’ latest video.

Please visit the following link to view the video:

http://www.wsw.com/webcast/wav/