Happy flash crash-A-versary!
Good morning / afternoon / evening - please choose whichever one which best describes when ever it may be that YOU are stumbling across this OUTTA CHARACTER and pre Monday Morning note…hey, still waiting for latest Lacy Hunt process of thought to drop and so, I thought I’d chime in again.
WHY?
Well, in addition TO what was sent and noted yesterday,
… including ALL the kings horses and all the kings men from Global Wall Streets sellside and their updated narratives (to the best of my now somewhat more limited abilities) …
Well, as far as why … I wanted to pause and wish one and all a very happy Flash Crash-A-versary.
FRBNY - From the Vault: A Look Back at the October 15, 2014, Flash Rally
OCTOBER 15, 2019Five years ago today, U.S. Treasury yields plunged and then quickly rebounded for no apparent reason amid high volatility, strained liquidity conditions, and record trading volume in the market. Federal Reserve Chair Jerome Powell, then a Board governor, noted that such episodes, “threaten to erode investor confidence” and that investors need “to have full faith in the structure and functioning of Treasury markets themselves.” The October 15, 2014, “flash rally” led to an interagency staff report on the events of that day, an annual series of Treasury market conferences, additional study of clearing and settlement practices, and the introduction of a new transactions reporting scheme. Many of these developments are discussed in posts (see, for example, here and here) in the Liberty Street Economics archive….
There are TONS of excellent resources cited and in addition to them, a couple / few others worth noting because as we all know — and are being reminded with current day geopolitical strife, if we don’t learn from history we’re doomed to repeat it …
Bloomberg: Bond Traders Fear Oct. 15-Style Volatility Could Repeat by Matt Boesler (March 30, 2015 — 6:45 PM UTC)
… On Oct. 15, U.S. Treasury trading volume soared to record levels as yields on the 10-year note tumbled 0.34 percentage point to a low of 1.86 percent that day. Most of that drop occurred in a 10-minute span from 9:30 a.m. in New York, before yields ended the day at 2.14 percent.
CNBC: US officials: No single cause for 2014 bond market ‘flash crash’ (UPDATED MON, JUL 13 201512:28 PM EDT)
MarketWatch - Why the bond market went bananas one day
… There was a big unwinding of short positions both before, and on, Oct. 15. Those shorts were bets that interest rates would rise, but investors were removing them in wake of uncomfortable news coming out of Europe, and uncertainty over what the European Central Bank would do.
There were some big trades between the retail sales report, which came out at 8:30 a.m. Eastern, and the flash rally between 9:33 and 9:45 a.m. The government report suggests that perhaps orders were taken off the table after those big trades…
I now return you to your regularly scheduled NFL watching and any / other programming … THAT is all for now. I mean it.
Enjoy whatever is left of YOUR weekend …