An explosion of volatility in US Treasuries following the collapse of Silicon Valley Bank has provided the sternest test of a market that underpins much of the global financial system since a dramatic meltdown in the early stages of the Covid-19 pandemic.

But while the $22tn market for US government debt this week suffered its most volatile period since the global financial crisis a decade and a half ago, surpassing even levels seen in March 2020, investors and analysts said market functioning by and large held up.

Daily trading volumes more than doubled as the failure of SVB sparked a headlong dash into the safety of Treasuries. Bets that the banking crisis would force the Federal Reserve to slow, or even call off, its plans to raise interest rates further fuelled demand, leading to the biggest one-day rally in short-term Treasuries since 1987.