The Federal Reserve does not see signs of liquidity problems in U.S. bond markets, despite warnings from investors to the contrary.

“While market commentary increasingly pointed to a possible deterioration in liquidity in these markets, a variety of liquidity metrics -- including bid-asked spreads and bid sizes -- have displayed no notable signs of liquidity pressures over the past half-year,” the Fed board said Wednesday in the U.S. central bank’s semi-annual monetary policy report to Congress.

U.S. regulators said in a report Monday that sharp swings in the Treasury market on Oct. 15 were in part caused by the abrupt withdrawal of buy offers by banks, exacerbated by multiple orders from high-frequency traders that canceled each other out.

Treasury yields plunged and then rose, covering a 37-basis- point range during a 12-minute period starting at 9:33 a.m., an intra-day change that has only been exceeded three times since 1998. Those occasions, unlike the Oct. 15 move, were driven by significant policy announcements.

Financial firms have complained that a series of rules implemented under the 2010 Dodd-Frank Act have reduced liquidity in the bond market and exacerbated price swings.

“All told, while the current level of liquidity in the on- the-run interdealer market seems healthy, some aspects of price movements and liquidity metrics in this market warrant careful monitoring,” the Fed board said in its report.

Moderate Risks

In a section on financial stability, the Fed board said risks remained moderate.

“Large banking firms’ direct net exposures to Greece are low, although financial vulnerabilities from the situation could become more concerning if large European counterparties were weakened by a significant deterioration in peripheral European countries,” the report said.

Credit markets have shown “some signs of reach-for-yield behavior,” the report said, while underwriting standards on leveraged loans “remain weak” even as regulatory guidance appears to be slowing issuance.

“The share of loans -- mostly those for middle-market companies -- originated by nonbank lenders reportedly has increased a bit further,” the report said.

Commercial real-estate property prices continue to increase rapidly, and underwriting standards in that market have loosened, the report said.

The report also noted that large redemptions at mutual funds that hold less liquid bonds “might amplify volatility” in a period of rising long-term rates.