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Jamie Dimon's Stark Rate Hike Warning: Treasurys "Will Be Violently Volatile" When Rates Rise
Earlier this year in his letter to shareholders, Jamie Dimon jumped on the bond market liquidity warning bandwagon.
As you may recall, Dimon spoke out not only about the lack of liquidity in corporate credit markets (something which is always fun for sellsiders because it provides a nice “told you so moment” with regard to the Volcker Rule’s attempt to deter “evil” prop trading), but also about Treasury market depth and the rather disconcerting fact that six sigma events are happening in rapid succession. As a refresher, here are the notable excerpts:
The likely explanation for the lower depth in almost all bond markets is that inventories of market-makers’ positions are dramatically lower than in the past. Dealer positions in corporate securities are down by about 75% from their 2007 peak, while the amount of corporate bonds outstanding has grown by 50% since then.
Recent activity in the Treasury markets and the currency markets is a warning shot across the bow
Treasury markets were quite turbulent in the spring and summer of 2013, when the Fed hinted that it soon would slow its asset purchases. Then on one day, October 15, 2014, Treasury securities moved 40 basis points, statistically 7 to 8 standard deviations – an unprecedented move – an event that is supposed to happen only once in every 3 billion years or so (the Treasury market has only been around for 200 years or so – of course, this should make you question statistics to begin with). Some currencies recently have had similar large moves. Importantly, Treasuries and major country currencies are considered the most standardized and liquid financial instruments in the world.
Indeed, last October’s Treasury flash crash was a wake up call to quite a few market participants and served to validate two concerns we’ve been pounding the table on for years: 1) the presence of nefarious algos across markets means flash crashes are no longer anomalous but in fact part and parcel of today’s broken markets, and 2) the Fed’s move to suck every last vestige of high quality collateral out of the market has led to an acute lack of liquidity.
Or, visually:
Now, Dimon is back at it, warning that when (or maybe “if” is more appropriate) rates start to rise, Treasurys could sell off “violently”. Here’s more, via Bloomberg:
Jamie Dimon, JPMorgan Chase & Co.’s chief executive officer, said the bank will be prepared for the possibility that Treasury prices move violently when interest rates rise.
“The one thing I do worry a little bit about, by the way, is Treasuries,” Dimon said Friday at a conference in New York sponsored by Barclays Plc. “Interest rates have been so low, for so long,” he said, adding that some traders and their managers have never experienced a rising interest-rate environment.
“So I wouldn’t be shocked to see 10-year Treasuries, when rates are going up, people change their mind, they change direction, that they will be violently volatile and go up much faster than people think,” Dimon said. “I’m not predicting that. I’m simply saying in the back of my mind, I think that’s a possibility.”
So while Dimon is worried that "some traders and their managers" have never seen a rate hike - something we warned about back in May - we're sure no one at JP Morgan falls into that category, and besides, the bank is great at hedging tail risk...
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Hey Dimon, flash us your Presidential cuff links you crony turd.
First up against the wall with the revolution comes, and he knows it.
When it comes to the rate hike, you really do have to give it to Ben Bernanke for being completely correct:
"No Rate Normalization During My Lifetime."
Fuck you, Dimon- your only expertise on rate forecasting is how much bribe money you need to pony up.....
Bullshit, the 10 year takes off, and the country goes into an unhideable depression. The Fed will have to QE to infinity for real to kick the can again and again. And then hyperinflation.
We must really be getting close. These guys, who made the largest portions of their wealth via mechanisms they now pretend to condemn, as detrimental to the health of the nation.
Translation; now that I've reaped the benefits of horrific malinvestment and unsustainable fiscal policy, we really need to knuckle down and get serious about fixing things.
Well fuck you Jaime.
When this blows up, and it is certain to, I hope your neck is the first to feel the noose.
why are there no iron bars in that photo?
even cancer doesn't like this guy.
He's already a living cancer. Any 'tumors' are probably normal cells trying to get away.
Hey Hi me, can you spell: BWANKER!!!!
;-D
Mr. Dimon sounds like he's trying help his prop desk out the hole by jaw-boning the muppets. Good luck with that, buddy -- Schwab's spread on the benchmark 10yr has exploded to 4+bps. Not much retail trading in this space, so fuggedabout jaw-boning and get ready for a real boning as you try to cover those misbegotten shorts.
I'd rather see them on the run, experiencing that constant daily uncertainty that the rest of us have had to live with for years. Knowing the hammer is coming down, but no idea how or when. Always on the move, always looking over their shoulders, always waiting for that knock on the door.
For at least 5 years. Then hang him.
You know he's been practicing speaking New Zealandish pretty religiosly of late.
So he's predicting a spike in suicides for secondary marketing directors at lending institutions across the country. If the 10-yr goes above 3% and continues from there we're in a trouble.
"Bribe Money" or Tribe Money !!!!!!!!!!!!!!!!!!!!1
Pigs slopping at the trough.
It's never enough until......
The same treasury market referenced in the suit against the PDs for rigging said market?
Say it ain't so Jamie! Cry me a river . . . . . . straight to Israel.
Dimon is on the propaganda trail. This is akin to Hank Paulson's "the world will end if congress doesn't pass TARP".
The story is 100% bullshit. Dimon could be referring to the banking sector, as it's already insolvent and 100% reliant on money printed from thin air, so if rates rose that would cause real problems for the Fed in the bond market.
Not sure about y'all, but I'd embrace "violently volatile" myself. Would be nice to watch the undoing of 30 years of banking theft.
With 8 sigma moves, should we really be questioning statistics...or the centrally planned markets?
Thank you, Mr. Dimon, for illustrating how battered wife syndrome can be translated into finance.
So time to bail out of those risky Government bonds and into the relative safety of equities? Thanks for the heads up Jamie! Now feck off!!
I just wonder if Dimon has his escape errr... vacation plan for a tropical island done yet?
I was half waiting to hear of Sloan Kettering's new treatment facility in Paraguay
mental masturbation over something which probably aint going to happen no doubt if he is selling a treasury product his bastard company is probably betting against it at the same time
Wait, wait wait...., we still have traders in these "markets" ? I thought robots took care of everything.
Rate hike? Does not compute.
Don't worry. Jamie and his crew will continue to make a tidy profit, bread and butter hundreds of millions a year, just by getting cheap money from the Fed, and buying treasuries.
Like Goldman, and others, banks take their private-federal-reserve fiat at 0.1% {or nearly} percent and buy treasuries at 2% {or whatever} - and you get to pay for it!
Those actually arguing that a cashless society will bring about a Krugmanian utopia where economists can engineer a perfect economic society relies on the stunning misconception that economics is a science and that human life can or should be reduced to economic metrics.
But all that shit aside - how has no one taken a shot at this guy?
Did he at least get hit with a pie or was that the other weasel Blankfein?
Its over. No matter what they do, this shit is broken.
Wonder what Jaimie is going to say when the last of JPM's gold evaporates from the registered column over at the Comex, and he's having to face a very angry and armed Eric Cartman demanding he hands over his jew gold.
https://m.youtube.com/#/watch?v=aFD_WVKZ1dA
How about "Long Treasury bond yields will move violently down if/when or not even if the Fed raises short rates"?
Growth sucks, and inflation is absent, so if the Fed wants to raise rates and sit on it even more, fine by me.
Only threat to Treasuries is (start of) QE 4.
QE2 and 3 were said to present a similar threat at the time... There has to be a spark of 'no-confidence' that catches - somewhere, and takes hold. In fact, just such an occurrence could indeed be smoldering right now in plain sight - far away from U.S. shores.
I worry about the after effects of that babe I went down on 20 years ago...
I'd be more worried about an Ebola outbrake and permanent martial law.
If you're still listening to shits like this, you deserve it.
I'd be more worried about an Ebola outbrake and permanent martial law.
If you're still listening to shits like this, you deserve it.
The con game is over. The Fed played it's hand. It will never raise rates and this has been exposed.
The fiat shell game is over.
BUY SILVER
I smell Whale Trade 2.0. A criminal always returns to the scene of the crime. And Dimon is a banker CEO, so he is a lying thieving idiot by profession.
fuck you dimon you leech. You produce nothing to society. keep sucking off FED QE like the soppy whore you are.
Hey Jamie, the only thing that's going to get Violently Volitile are the masses of people hunting you & you vermin cohorts like the filthy dogs that you are.
I was hoping Mr. Dimon would say "peacefully volatile." Why be violent? It's only money--easy come, easy go.
FUCK YOU, DIMON!!!!! BASTARD!!!!!!!!!!!!!!!!!!!!!!!!!!!!
precisely why they will never rise, the underlying fiat will die first.
roll the motherfucking guillotines already!
No shit
...Mycroft...errr...Sherlock...
This man deserves to be in SuperMax and his bank and all it's affilites shut down.
This man deserves to publicly executed in the most bloody way possible in a public venue for all to see. Maybe Kim Jong Un would be interested in bringing his anti-aircraft artillery firing squad to the US for a special show.
Too humane...
Dr. Detroit to Jamie (mob boss) Diamond:
"Mom, I am going to rip off your head and shit down your neck."
THE DOCTOR LIVES!!!!!!!!!!!!! HELLS YES!!!!!!!!!!!!
LOL fuck off Dimon.
Once again Jamie bestows upon us his exceptional wisdom and extraordinary appraisal of our financial situation. We are so blessed.
When he's quiet its the most "up to no good" feeling, he must think hes gotten it in the bag if he's yapping again. Probably has, in the low down wormiest way possible. If they put a 16th of this energy into something beneficial, it would be quite a sight.
Somebody defenestrate this assclown already...
Jamie,
Where are you on the list?
Specially Designated Nationals and Blocked Persons List
USSGL TFM Part 2 Fiscal Year 2016 Reporting - Treasury ...
Don't tell us your cancer has come out of remission. Who is going to boot off the Maiden Lane bullshit?
FRB: H.4.1 Release--Factors Affecting Reserve Balances ...
Jamie's got a gun... and he'll pull the trigger on the bond market himself is what he really means. What a fascist piece of shit.
Well, you worry about it then. If you still think its relevant.
Sounds like he's talking his book. Shorting treasuries in a deflationary environment can be problematic.
Crushing Dimon would be too easy. Instead I'd like to thank the participants on the Treasury Joint Staff Report and flash crash summary who should stand up and take a bow in light of their contributions. They were very insightful to me.
There are a lot of individuals and teams doing great work every day and we should acknowledge this far more often.
Half the people working at JPM probably more are 26 ~ 30 I felt old when I worked there.
Go back to your summer retreat in the Hampton's Jamie, spend the weekend at Bernie's. You might be lucky enough to meet your timely demise, have someone prop you up all weekend like you're still alive and not have the masses hunt you down like the pig you are.
Go piss off you oinker.
Dear Jamie,
Please take advantage of the next available opportunity to FUCK YOURSELF RAW. cunt.
So, this is rocket science? Blaahh. Dimon should be tarred and feathered, and fed to the horses.