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A couple of weeks old but an interesting Bloomberg article showing empirical evidence of a rapid deterioration of financial liquidity since the Fed raised interest rates in December by just 25 basis points. No-one thought the unwind of nearly seven years of a zero interest rate policy would come without stress on the system---but with the added bank trade and balance sheet regulation post financial crisis, the situation appears destined to get worse.
"The combination of these two factors has led to a somewhat vicious cycle and feedback loop, where poor liquidity is spreading, and liquidity problems appear to be turning into fundamental problems," the pair wrote. "Moreover, tightening of monetary policy by the Fed, first through tapering and now through tightening, may have been necessary from an economic perspective, but the tightening appears to be adding fuel to the fire of liquidity deterioration."
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