Are Bonds really that liquid ?

Bonds, particularly Treasuries, are commonly regarded as the most liquid assets globally. However, are they truly as liquid as they should be? They are expected to be! In the repo market, a significant portion of the collateral consists of Treasuries. According to the definition, collateral should be free of credit and liquidity risk. While stocks have not seen a substantial decline, Bonds, on the other hand, have experienced a decrease of over 50%. This decline is reminiscent of, if not more severe than, the stock market drawdown observed in 2008.

The stock market and the bond market are roughly equivalent in size.

Are they genuinely as liquid as they seem? I have my doubts. People on Twitter are saying that it doesn't matter that they've declined by over 50% since they mature at par in 30 years. What? That doesn't strike me as liquidity.

Even as a long-term investor, if your investment horizon surpasses the bond's maturity and you anticipate rising interest rates, it's vital to acknowledge that locking in a sub 1% nominal rate on a 10-year bond three years ago could result in a real return over the next seven years of approximately -3% to -5%. Consider real returns, factoring in inflation, not just nominal values.

Thanks,

Finn