Since fixed-income ETFs trade on exchanges, it should be noted that they’re providing an additional source of liquidity for some investors who now have limited access to bond markets. ETFs are serving as price-discovery vehicles in these markets. The drop in liquidity is evident in the fixed income market right now, along with a drop in volume.
Even in the current bond market there is a reduced amount of individual stocks being traded. Intraday ETF prices are actually filling that gap.
International bond markets are also impacted right now, as the spreads in these funds are widening. The Treasury market is also being affected likewise with widening spreads.
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