The market's biggest worry has suddenly stopped being a big deal

Everyone from JPMorgan chief Jamie Dimon to Blackstone billionaire Steve Schwarzman to bond guru Bill Gross has sounded the alarm about the lack of liquidity in the bond market.

In the nightmare scenario, investors and traders would sell bonds in an illiquid market, which would cause prices to plunge and interest rates to explode.

Now there is a growing group of policy makers and executives who disagree. 

Steve Zamsky, who is the global head of credit at Morgan Stanley, said at an industry panel on Monday that the "marketplace works just fine", according to a report from Michael J Moore and Alex Harris at Bloomberg. 

Kashif Riaz, a managing director at BlackRock, which is the world's biggest fund manager, said the debate had become "overheated" at the same panel, according to the report.

That echoes Krishna Memani, the chief investment officer of OppenheimerFunds, who told Mary Childs at Bloomberg recently that warnings over reduced liquidity were a Wall Street tactic to pressure regulators into loosening some rules. 

"Everyone is talking about it as if the whole world will come apart because there are billions that have gone into this market, so all of a sudden billions will leave."

Federal Reserve chair Janet Yellen has also said there has been no notable deterioration in liquidity in the Treasury market, a view echoed by former Fed chair Paul Volcker.

The debate is a complex one. Investment banks argue liquidity has deteriorated as a result of increased regulation, and asset managers have expressed concerns over their ability to buy and sell bonds in times of stress. BlackRock for example has previously described the bond market as broken.

That has led to an increased focus on the regulation of asset managers. Fund managers unsurprisingly have bristled as the possibility of increased oversight, and have lobbied aggressively against what they consider to be bank-like regulations.

That has led some to conclude that the change in tone might be an effort to down play the concerns that led to the increased regulatory focus.