Barclays Predicts Growing Treasury Market Will Need Bailouts

The Treasury market has been rendered structurally unstable by its explosive growth and is likely to require occasional “official interventions” to support its functioning, according to strategists at Barclays.

The $31 trillion US government debt market “has grown far faster than the quantum of bank capital,” creating a gap between the supply and demand for liquidity that reverses a decades-long trend and is “the underlying force driving market fragility,” according to a March 30 report by New York University finance professor Jeffrey Meli and several of his former colleagues at Barclays.