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Learning From Market Tremors | Hari Krishnan

Forward Guidance

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The Real Issue in Securitized Lending Is Liquidity

The real issue in securitized lending is liquidity. It's not credit. Even though treasuries have duration risk, they're highly liquid. So it's more effective as collateral because if someone is accepting that 10 year note as collateral, they're not that worried about whether yields are going to widen over the next six months. They're worried about whether they can sell that security tomorrow without price impacts.

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