JPMorgan Chase & Co. head Jamie Dimon said last year\’s volatility in U.S. Treasuries is really a \”warning shot\” to investors which the next economic crisis could be exacerbated by a shortage of the securities.
David Rosenberg: Why on the planet investors would want to own bonds is really a mystery to me
Gluskin-Sheff’s chief economists says, for those seeking income, equities today are better yielding than government bonds, that have become the domain for brave speculators. Read on
The Oct. 15 gyration, when Treasury yields fluctuated by almost 0.4 percentage point, was an \”unprecedented move\” that would have serious consequences inside a stressed environment, Dimon, the brand new York-based bank\’s chairman and ceo, said inside a letter Wednesday to shareholders. Treasuries are meant to be among the most stable securities.
Dimon, 59, cited the incident as he waded into a debate about whether bank regulations implemented after the 2008 financial crisis exacerbate price declines by limiting the ability of Wall Street banks to create markets. It\’s just a matter of time until some political, economic or market event triggers another economic crisis, he said, without predicting one is imminent.
The Treasuries move was \”an event that is supposed to happen only once in every 3 billion years approximately,\” Dimon wrote. A future crisis could be worsened because there \”is a reduced supply of Treasuries to go around.\”
New regulations have resulted in diminished liquidity across bond markets, that could result in higher volatility during a crisis, Dimon wrote.