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How Has Treasury Market Liquidity Fared in 2025?

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Abstract

In 2025, the Federal Reserve has cut interest rates, trade policy has shifted abruptly, and economic policy uncertainty has increased. How have these developments affected the functioning of the key U.S. Treasury securities market? In this post, we return to some familiar metrics to assess the recent behavior of Treasury market liquidity. We find that liquidity briefly worsened around the April 2025 tariff announcements but that its relation to Treasury volatility has been similar to what it was in the past.

Suggested Citation

  • Michael J. Fleming, 2025. "How Has Treasury Market Liquidity Fared in 2025?," Liberty Street Economics 20251112, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:102093
    DOI: 10.59576/lse.20251112
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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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