Loomis Sayles: Current Risks Related to US Treasuries Are Not a Systemic Crisis, But Short-Term Disturbances in Liquidity and Confidence

08/22 20:45

An Yun, Co-Director of Investments and General Manager of the Public Equity Investment Division at Loomis Sayles, stated that based on the information currently available, the risks related to US Treasuries are not a systemic crisis, but rather short-term disturbances in liquidity and confidence. Regarding why the market reacts strongly to liquidity issues, An believes that the related concerns stem more from 'ambiguity + impact.' 'Liquidity issues are complex and difficult to see through at a glance, and once a risk materializes, the short-term impact can be severe, easily misinterpreted as a systemic financial crisis; however, historical cases—such as the UK pension crisis and Silicon Valley Bank—show that liquidity shocks can be quickly addressed by central banks, which is fundamentally different from a debt crisis that requires high leverage. Each shock may actually present a buying opportunity.' Meanwhile, supply pressures should not be overstated. An noted that the issuance of corporate bonds in the US significantly decreased in July compared to June, contrary to market concerns of 'supply flooding'; some of the issuance pressure for US Treasuries in the third quarter has already been released in July, and subsequent supply pressure is expected to ease marginally.
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