More warnings on the (diminishing) financial market liqudity, this time from Prudential Investment Management Chief Executive Officer David Hunt
- Says the No. 1 concern among bond buyers globally is liquidity and its rapid disappearance
"The biggest worry of the buy side around the world is that there has been a dramatic decline in liquidity from the sell side for many fixed income products. I think it's a big risk and is one of the unintended consequences" of regulators trying to prevent another financial crisis
- "If we had a major political event or something that caused rates to spike and traders needed to get out of the current position they have, and there was a lot of people that wanted to do that, I think it would be quite difficult"
- The size of the U.S. bond market has swelled 23 percent since the end of 2007 through the end of last year, trading has fallen 28 percent in the period, Securities Industry & Financial Markets Association data show
- Regulators, seeking to reduce risk, have made it less attractive for banks to hold an inventory of tradable bonds
- JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon warned in a report last week the next financial crisis could be exacerbated by a shortage of U.S. Treasuries.
More at Bloomberg.
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What these guys need is to employ some traders who have just gone through the biggest ever disappearance of liquidity instantly ... that is the SNB removal of the CHF cap and the following turmoil.
Dealing with situations like that needn't be all that difficult.
Just put your head between your knees and kiss your *** goodbye.