Redemption Risk of Bond Mutual Funds and Dealer Positioning

Tobias Adrian, Michael Fleming, Or Shachar and Erik Vogt

No 20151008, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Market participants have recently voiced concerns that bond markets seem to become illiquid precisely when they want to sell bonds. Some possible reasons for a decline in corporate bond market liquidity in times of stress include the increasing share of corporate bond ownership by mutual funds and the reduced share of corporate bond ownership by dealers. In this post, we examine the potential effects of outflows from bond mutual funds and the role of dealers? positioning in corporate bonds.

Keywords: liquidity; dealers; mutual funds (search for similar items in EconPapers)
JEL-codes: G1 G2 (search for similar items in EconPapers)
Date: 2015-10-08
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