“Sir, Your article “Grinding to a halt” (Analysis, June 20) reports that the US corporate bond market faces a “liquidity drought” because large bank dealers have reduced their bond inventories significantly. It is true that inventories have declined from the peak reached in 2007 before the financial crisis. Relative to the size of the market, however, bank inventories are now about where they were in 2001, before the credit bubble began to inflate. In 2001 outstanding US corporate bond market debt was $3.8tn. In 2011 the total had approximately doubled to $7.9tn. But if we look at the graphical data on bank inventories that accompany the article, it appears that 2011 bank inventories are approximately double those of 2001. So current inventory levels are hardly novel…”

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