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Reduced Liquidity in Bond Markets Concerns Portfolio Managers 

August 5, 2014
Tom Lauricella, Wall Street Journal

Selling Pressure Could Overwhelm Market Once Fed Starts to Raise Rates.

Even as investors continue to pour money into bond funds, portfolio managers are concerned. And that concern is about more than just the potential for rising rates.

A nagging issue is that on post-financial-crisis Wall Street trading desks, it has become harder for fund managers to buy and sell blocks of bonds.

Will some popular corners of the market be able to handle the selling pressure should there be a sustained, sharp drop in bond prices and an exodus by investors who have piled into bonds in recent years? It is a particular worry for whenever the Fed starts raising rates, which could send bond prices falling.

Read more: Wall Street Journal

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