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  • Andy Sparks of MSCI says investors should be watching deteriorating liquidity in Treasurys.
  • Sparks said it could hurt money managers’ returns.
  • He also shared investment opportunities he sees right now.

In an environment where returns are sparse, hedges like risk-free Treasurys play an important role for money managers. 

But those hedges may now be in trouble, according to Andy Sparks, the head of portfolio management research at MSCI, a market research firm. 

That’s because liquidity in the Treasury market is drying up and is now near levels seen at the height of the COVID-19 shock in financial markets, when bid-ask spreads jumped, prices became more impacted by trades, and price volatility rose. Liquidity refers to how easy it is to get into and out of an investment. 

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