Record-breaking yields in the Treasury market are part of action not seen in bonds for 40 years, according to JP Morgan's Bob Michele.
Liquidity issues in which buyers and sellers are having a hard time coming together on prices are just part of the problem, Michele, the firm's chief investment officer and head of global fixed income, said Monday on CNBC's "Power Lunch."
"I've been doing this 40 years. I've never seen that before," Michele told CNBC's Steve Liesman, who inquired about half-point difference in what buyers were willing to pay and sellers were willing to sell for, referred to as the bid-ask spread.
In fact, Michele said that at one point he received a call from JP Morgan Asset Management's London office to say that there were no offers on the 30-year bond.
"I've never seen that before," he said. "These are uncharted times for sure."
The liquidity issues happened as the 10-year yield at one point fell below 0.4% and the 30-year bond dropped below 1%, both firsts in a bond market that has seen a stampede of buyers looking for safety amid the coronavirus scare and a price war in the oil market.
However, some high-profile market veterans said the liquidity issues are not unusual and not threatening to the proper functioning of markets. Both David Tepper of Appaloosa Management and Jeffrey Gundlach of DoubleLine Capital both told CNBC that the issues are likely temporary and that the moves in markets, though dramatic, have been orderly.
Michele said the Federal Reserve is going to need to provide more easing, and he expects an announcement could come as soon as today. The Fed last week instituted a 50 basis point emergency rate cut and on Monday announced it was increasing the amount available in its short-term funding, or repo, program for banks.
"They need to get liquidity into the system and they need to put pressure on Washington to figure out how to get credit lines to small- and mid-size businesses," he said.
However, he said the central bank also needs help from fiscal authorities in the White House and on Capitol Hill. A fiscal stimulus "would stop it in its tracks," he said of the slide in bond yields, though he still sees a 50-50 chance of a recession.
Michele said he expects the fed to announce 50 basis point rate cuts in March and April that would take its benchmark funds rate down closer to zero again, where it was during the financial crisis and for seven years after.