1.0Liberty Street Economicshttps://libertystreeteconomics.newyorkfed.orgblog authorhttps://libertystreeteconomics.newyorkfed.org/author/blog-author/MBS Market Dysfunctions in the Time of COVID-19 - Liberty Street Economicsrich600338<blockquote class="wp-embedded-content" data-secret="BMwCpKwriC"><a href="https://libertystreeteconomics.newyorkfed.org/2020/07/mbs-market-dysfunctions-in-the-time-of-covid-19/">MBS Market Dysfunctions in the Time of COVID‑19</a></blockquote><iframe sandbox="allow-scripts" security="restricted" src="https://libertystreeteconomics.newyorkfed.org/2020/07/mbs-market-dysfunctions-in-the-time-of-covid-19/embed/#?secret=BMwCpKwriC" width="600" height="338" title="“MBS Market Dysfunctions in the Time of COVID‑19” — Liberty Street Economics" data-secret="BMwCpKwriC" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" class="wp-embedded-content"></iframe><script>
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https://libertystreeteconomics.newyorkfed.org/wp-content/uploads/sites/2/2020/07/6a01348793456c970c0263ec27f20d200c-500wi.jpg500313Haoyang Liu, Asani Sarkar, and coauthors study a particular aspect of MBS market disruptions by showing how a long-standing relationship between cash and forward markets broke down, in spite of dealers increasing the provision of liquidity. The analysis also highlights an innovative response by the Federal Reserve that seemed to have helped to normalize market functioning.