A top researcher at MSCI breaks down why investors should be worried about a ‘brewing’ liquidity crisis in the Treasury market — and shares 4 investing ideas he sees gaining popularity Kopie Andy Sparks of MSCI says investors should be watching deteriorating liquidity in Treasurys. Sparks said it could hurt money managers’ returns. He also shared investment opportunities he sees right now. In an environment where returns are sparse, hedges like risk-free Treasurys play an important role for money managers. But those hedges may now be in trouble, according to Andy Sparks, the head of portfolio management research at MSCI , a market research firm. That’s because liquidity in the Treasury market is drying up and is now near levels seen at the height of the COVID-19 shock in financial markets , when bid-ask spreads jumped, prices became more impacted by trades, and price volatility rose. Liquidity refers to how easy it is to get into and out of an investment. While Sparks said the liquidity deterioration in the Treasury market isn’t at crisis levels yet, it’s getting there. “It’s brewing, and it’s something that investors and market participants should be focused on,” Sparks said.