Two weeks ago, traders at TwentyFour Asset Management came into the office after a weekend in which a global oil price war had erupted. The ensuing crash in crude made investors who were in the early stages of fretting about the coronavirus outbreak even more alarmed.
The traders hoped to sell a “modest” holding of 30-year US government bonds— one of the safest, most easily traded financial assets in the world — and asked three of the banks specially tasked with supporting US government debt auctions for prices. Two refused to bid at all. “This was extraordinary, and unprecedented in our experience,” said Mark Holman, chief executive officer at the asset manager, in a note to clients.
The incident reflects the intense strain at the heart of a financial system struggling to cope with an economic shock of huge, but uncertain proportions. The ease of buying and selling even the safest, most high-quality assets has deteriorated dramatically. JPMorgan has dubbed it the “Great Liquidity Crisis”, noting that it has piled extra volatility on to already fragile market conditions.