We show that multimarket contact (MMC)—the extent to which the same dealers interact across many securities—disciplines pricing in corporate bond markets. In a repeated-game model, dealers alternate between supplying and demanding liquidity. A

dealer tempted to widen spreads for a short-run gain is deterred because she would face wider spreads herself when next demanding liquidity. MMC pools this discipline across securities: a deviation in one triggers retaliation in the others. The model predicts that higher MMC for one dealer lowers spreads for all dealers active in that bond, with the largest effects when adverse selection is high or trading is infrequent. Using TRACE data, we exploit within-bond-month variation across dealers and within-dealer-month variation across bonds. Higher MMC compresses interdealer spreads, with reductions passed through to customers. A shift–share instrument based on the sharp increase in investment-grade bond issuance during COVID confirms the result.

We study the determinants of US dollar demand across market participants and traded instruments using survey-based exchange rate and macroeconomic expectations. Leveraging granular foreign exchange trading data, we show that forward-looking expectations accurately predict both currency returns and flows. Specifically, we show that the predictability of currency returns at long-horizons can be attributed to price pressure that originates from investors whose trading activity is aligned with survey expectations. To empirically establish the relevance of survey-based expectations for currency flows, we present three results: First, end-user investors increase their dollar holdings when they expect the US dollar to appreciate, whereas dealer banks supply dollar liquidity. Second, cross-sectionally, investors rebalance along the factor structure of currency risk into the US dollar following an expected dollar appreciation. Third, the predictive power of survey forecasts weakens when uncertainty or forecaster disagreement rises. Overall, our findings demonstrate that long-horizon expectations accurately predict dollar demand across spot, swap, and forward currency markets. To rationalise these empirical findings, we develop a model of currency demand.

The on-the-run premium is one of the most widely studied phenomena in fixed income markets. Contrary to this long-standing phenomenon, we document that Treasury bills trade at an on-the-run discount. This spread between on-the-run and more seasoned Treasury bills is consistently negative and economically significant, exceeding 20 basis points in 2022. We link this discount to the relative available supply of bills, measured by the spread in primary dealer auction allocations between on-the-run and seasoned securities. Our findings suggest significant market segmentation and limited arbitrage activity in the market for money-like assets. We estimate that the Treasury could have saved between $9.2 and $23.4 billion in issuance costs if it were able to finance itself at off-the-run yields.