Sublime

Liquidity

The main characteristic of any asset is its liquidity, or the ease and speed at which one can buy or sell this asset for its market price. The most liquid asset is obviously cash—you can purchase it immediately or spend it on purchasing other assets.

Liquidity refers to the level of market interest — the level of buying and selling volume — available at any given moment for a particular asset or security. The higher the liquidity, or the deeper the market, the faster and easier it is to buy or sell a security.

Liquidity is defined as a sufficiency of cash to pay bills and cover any surprises or emergencies.

In the Treasury market, following several consecutive days of deteriorating conditions, market participants reported an acute decline in market liquidity. A number of primary dealers found it especially difficult to make markets in off-the-run Treasury securities and reported that this segment of the market had ceased to function effectively. This