Fed's Tarullo says something has changed in bond market, unclear why
Tarullo appeared at the Council on Foreign Relations and most of his comments touched on regulation.
This comment raised some eyebrows, especially since the Fed is a massive holder Treasuries:
"There does seem to be something different" in bond markets right now,Tarullo said. "Something does seem to have changed" in terms of things like the ability of a market participant to easily execute a large trade, he said.
"I don't think there is at this point a very precise and convincing explanation for exactly what has happened," Tarullo said. He said culprits could be signs of fragility could be tied to regulatory changes, the rise of high frequency trading and firms' willingness to engage in the market as potential drivers of current market conditions.
That's not exactly comforting.
