Odd Lots

Why Treasury Market Spasms That Shouldn't Happen Keep Happening

Apr 8, 2021

Yesha Yadav, a Professor at Vanderbilt Law School with expertise in market structure, delves into the perplexing volatility of the U.S. Treasury market. She discusses the regulatory inadequacies that contribute to these bizarre market fluctuations. Key topics include the impact of high-frequency trading, liquidity issues, and the diminishing role of primary dealers. Yadav advocates for a cohesive regulatory approach and emphasizes the urgent need for reform to maintain the Treasury's status as a reliable financial benchmark.

48:12

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Episode guests

Yesha Yadav

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Episode notes

Intro

2min

The Vulnerabilities of U.S. Treasuries

14min

Examining Liquidity Issues in the Treasury Market

2min

Treasury Market Liquidity Challenges

21min

Revamping U.S. Treasury Markets

7min

Navigating the U.S. Treasury Market's Challenges

5min

Exploring the Yield Curve as a Policy Instrument

3min

The U.S. Treasury market is the biggest, most liquid market in the world. Its smooth functioning is also crucial to the economy and the financial system. Yet it keeps experiencing bizarre, seemingly inexplicable bouts of volatility. We saw it in February. We saw it big time last March. And we saw it multiple times in recent years before then. On this episode, we speak with Yesha Yadav, a professor at Vanderbilt Law School, who argues that these episodes can be explained by the inadequate patchwork of regulations governing this market.

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