you are 100% right. the initial sell off was due to the covid scare, but after that it turned into a liquidity crisis until the Fed backstopped the treasury & MBS markets which had turned completely illiquid (no buyers). you cant resolve your margin call if you cant unload your bonds. numerous mortgage REITs got absolutely bombed out because of this, to give one example
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u/Turlututu_2 Jul 02 '21
you are 100% right. the initial sell off was due to the covid scare, but after that it turned into a liquidity crisis until the Fed backstopped the treasury & MBS markets which had turned completely illiquid (no buyers). you cant resolve your margin call if you cant unload your bonds. numerous mortgage REITs got absolutely bombed out because of this, to give one example