The interest rate increases have been punctuated by financial sector stresses and geopolitical risks that have emerged in the interim, and as shown in Figure 1, volatility measures for Treasury yields have been elevated and variable. The Federal Open Market Committee (FOMC) increased the target range for the federal funds rate to 5-1/4 to 5-1/2 percent, and the 10-year Treasury yield touched 5 percent last month. Against an economic backdrop of a strong labor market and higher-than-desired inflation, interest rates have continued to rise sharply. Review of Treasury Market Conditions in 2023Īs this audience is well aware, it has been an eventful year for the Treasury market and interest rate volatility has been high. Accordingly, my remarks this morning will consist of two parts: first, a review of Treasury market conditions and liquidity this past year, and second, a brief discussion of progress made by the Inter-Agency Working Group on Treasury Market Surveillance (IAWG), with a focus on a few workstreams led by Treasury. As I said last year, an important mission for us collectively is to strengthen the resilience of the Treasury market. Good morning and thank you all for being here today. I’ve been looking forward to this annual conference and the opportunity for official sector representatives, academics, and market practitioners to come together.
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