The global scramble for cash is putting immense pressure on bond markets, raising concern about whether they are functioning well enough to effectively distribute funds to communities and businesses.
In recent days, long-term Treasury securities have suffered significant price declines alongside large stock-market retreats, an unusual dual downturn that has raised alarm among traders. A stampede into dollars is pushing up the U.S. currency’s value overseas, adding to repayment woes for companies and governments that borrowed in dollars.
In the U.S., corporate issuance has been largely off limits to all but the bluest chips. State and local governments are facing sticker shock as steep declines in demand for their securities force rates much higher in some instances, while the market for short-term corporate loans has become surprisingly fragile, some market participants said.
(Read more: WSJ.com: Markets)
