In recent years, the liquidity of many fixed income markets has declined as banks have stepped away from their traditional role as market makers, triggering sharp market movements, as, for example, happened on October 15, 2014 when the yield of the 10 year Treasury experienced a 37 basis point...

Since December 2008, the Federal Reserve’s traditional policy instrument, the target federal funds rate, has been effectively at its lower bound of zero. In order to further ease the stance of monetary policy as the economic outlook deteriorated, the Federal Reserve purchased substantial...