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Although bond market liquidity throughout the world has been disrupted by the terrorist attack on the World Trade Center, one expert here believes that the lower rates and government intervention will prevent any long- term liquidity shortages on a global scale.
"The world economy needs liquidity and the central banks in the major markets are providing it," said Kurt Karl, head of economic research and consulting for Swiss Re America Holding.
Mr. Karl said that "the plight of the U.S. economy is being felt worldwide" and that central banks in other countries are likely to follow the United States' lead in continuing to lower short-term rates to alleviate liquidity concerns. According to Mr. Karl, yields on the 10-year U.S. Treasury bond have recently reached levels that have not been seen since October 1998, when the Russian debt default and troubles at hedge fund Long Term Capital ...