Investors are asking themselves a question that until recently had never been up for debate: how “liquid” are US Treasuries?

With $12.6tn of debt outstanding and more than $500bn changing hands daily, US Treasuries are considered the bedrock of global finance; but concerns about liquidity — the ability to buy and sell an asset in large size without affecting its price — are widespread.

For many, the wake-up call came on October 15 last year, when the yield on the 10-year US Treasury bond, which moves inversely to price, plummeted 34 basis points in early-morning trading. Banks pulled back from quoting prices, while other traders reduced their presence during the most extreme moments of turmoil, impairing the ability of investors to transact cash bonds.