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Major liquidity drain may fuel bond market vulnerabilities

It is plausible that cross-border bond purchases will average $0.5 trn in 2018 and 2019, a dramatic fall from $1.2 trn in 2017, driven mainly by reductions in European and US purchases. This will exacerbate upward pressure on bond yields over and above those associated with traditional macroeconomic drivers. The US bond market (and the dollar) are particularly vulnerable.

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