--- title: "OFR: Basis Trades and Treasury Market Illiquidity" description: Timely intervention by the Fed may have limited spillovers that could affect financial stability. image: https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/iStock-483210448-May-12-2022-09-19-34-60-AM.jpg --- ![websites-group](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/new-MMG-01.svg) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-new-marketsmedia-logo.svg)](https://www.marketsmedia.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-traders-redlogo.svg)](https://www.tradersmagazine.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-bestexe-logo.svg)](https://www.bestexecution.net/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-fidesk-logo.svg)](https://www.fixglobal.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-fixglobal-new-logo.svg)](https://www.fixglobal.com/) - [*Facebook*](https://www.facebook.com/MarketsMedia/) - [*Twitter*](https://twitter.com/marketsmedia) - [*Linkedin*](https://www.linkedin.com/company/markets-media-llc) - [Newsletter](https://articles.marketsmedia.com/ofr-basis-trades-and-treasury-market-illiquidity#popup-newsletter) #### Want the latest news on securities markets -- FREE? Sign up to receive exclusive articles on topics including: - Equity market structure - Profiles of buy-side investment firms - The evolution of multi-asset-class trading - Regulation and its implications for markets - The search for liquidity in fixed income markets - The convergence of fintech and capital markets Select one or more newsletters you would like to receive: menu [![Markerts media](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/header%20logo.svg "Markerts media")](https://articles.marketsmedia.com/) - [Treasuries](https://articles.marketsmedia.com/tag/treasuries) - Treasuries - OFR: Basis Trades and Treasury Market Illiquidity Search - [Home](https://articles.marketsmedia.com/) - [Trending](https://articles.marketsmedia.com/tag/trending) - [Featured](https://articles.marketsmedia.com/tag/daily-email-feature) - [Sectors](https://articles.marketsmedia.com/tag/sectors) - [From The Markets](https://articles.marketsmedia.com/tag/from-the-markets) - [AWARDS](https://articles.marketsmedia.com/tag/events) - [Newsletter](https://awards.marketsmedia.com/newsletter-sign-up) - [Newsletter](https://articles.marketsmedia.com/ofr-basis-trades-and-treasury-market-illiquidity#popup-newsletter) Hide search Search - NewsLetter ![](https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/trading-up-occ-iex-select-board-members-citadel-lands-lieblich-573x379-Jul-07-2022-09-34-11-57-AM.jpg) [ON THE MOVE: Citi Hires Artie Ambrose;...](https://articles.marketsmedia.com/on-the-move-citi-hires-artie-ambrose-natalie-a-brown-to-mesirow) ![](https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/Depositphotos_445735906_L.jpg) [Trading Adapts to ESG and Sustainable...](https://articles.marketsmedia.com/trading-adapts-to-esg-and-sustainable-investing) ![](https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/iStock-917493152-Jul-07-2022-09-34-19-09-AM.jpg) [Focus on FX Execution Connectivity](https://articles.marketsmedia.com/focus-on-fx-execution-connectivity) ![](https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/Depositphotos_333839538_L.jpg) [TRACE Turns 20](https://articles.marketsmedia.com/trace-turns-20) 07.17.2020 By Shanny Basar Treasuries # OFR: Basis Trades and Treasury Market Illiquidity 07.17.2020 By Shanny Basar ![OFR: Basis Trades and Treasury Market Illiquidity](https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/iStock-483210448-May-12-2022-09-19-34-60-AM.jpg) [Share](https://www.facebook.com/share.php?u=https://articles.marketsmedia.com/ofr-basis-trades-and-treasury-market-illiquidity) [Tweet](https://twitter.com/intent/tweet?text=US+ETFs+Have+Record+Net+Inflows&url=https://articles.marketsmedia.com/ofr-basis-trades-and-treasury-market-illiquidity) [Share](https://www.linkedin.com/cws/share?url=https://articles.marketsmedia.com/ofr-basis-trades-and-treasury-market-illiquidity) The Office of Financial Research (OFR) published a brief entitled “*Basis Trades and Treasury Market Illiquidity.*” The Treasury basis trade exploits the price difference between Treasury bonds and futures. The trade is exposed to financing and liquidity risks that can affect market liquidity. This brief summarizes evidence on the size and extent of basis trading by hedge funds, and on whether these trades contributed to Treasury market illiquidity in March 2020. https://twitter.com/OFRgov/status/1283795276075896833 Timely intervention by the Federal Reserve in the Treasury and repurchase agreement markets may have limited the extent of spillovers that could affect financial stability. The brief can be found here: [https://financialresearch.gov/briefs/2020/07/16/basis-trades-and-treasury-market-illiquidity/](https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.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.wPAM6NnTH6OsbAjlbUCUmPdG1vYXD-MwzvW-IKWPjWs/s/464335145/br/81132154231-l) Source: OFR [Share](https://www.facebook.com/share.php?u=https://articles.marketsmedia.com/ofr-basis-trades-and-treasury-market-illiquidity) [Tweet](https://twitter.com/intent/tweet?text=US+ETFs+Have+Record+Net+Inflows&url=https://articles.marketsmedia.com/ofr-basis-trades-and-treasury-market-illiquidity) [Share](https://www.linkedin.com/cws/share?url=https://articles.marketsmedia.com/ofr-basis-trades-and-treasury-market-illiquidity) ![email](https://articles.marketsmedia.com/hubfs/Markets%20Media/email.svg) ### NEWSLETTER SIGN UP And receive exclusive articles on securities markets ### Related articles 1. 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