Fed official: 'Something different' about bond market, yet hard to say what

There is "something different" about the bond market, but there is not yet a "precise and convincing explanation of exactly what has happened," said Federal Reserve Governor Daniel Tarullo during a speech at the Council of Foreign Relations in New York.

"It is an issue that everybody needs to be thinking about assessing more," especially whether it is a financial risk, Tarullo suggested.

He added that the Fed attention was attracted by the sharp bond market sell-off last October 15.

Many analysts say the lack of liquidity in the market was caused by regulations in the aftermath of the financial crisis.

However, Tarullo, who is managing the Fed's regulatory efforts, said Dodd-Frank and other regulations were only one of several reasons at play.

The other factors were shifts in market structure, more involvement of asset managers in the market, as well as high frequency trading.