U.S. bond auction 'a disaster' following cyberattack on world's largest bank: fixed income expert
, BNN Bloomber00:00 / 07:29
, BNN Bloomber00:00 / 07:29
A cyberattack on the world’s biggest bank in China caused liquidity issues in U.S. Treasuries, and fixed income experts suspect it was the cause of a weak bond market auction.
The Industrial and Commercial Bank of China Ltd. (ICBC) confirmed on Nov. 9 that it had suffered a cyberattack which prevented facilitating trades, leaving brokers severely impacted. The uncertainty is speculated by market experts to be the reason behind a weak U.S. Treasury auction last week.
“The long bond auction last week, it was a disaster,” Andrew Brenner, head of international fixed income at NatAlliance Securities, told BNN Bloomberg in an interview on Monday.
Brenner suggested that the ICBC situation was the cause of the poor auction results, as the bank dealt with ransom and couldn’t clear transactions, leading to buyers walking away from the long bond market at the U.S. auction.
“That really affects Treasury liquidity,” he said.
'AMERICAN-RUN'
Brenner characterized ICBC as an “American-run organization” within the largest bank in the world in China, which does a lot of trade-clearing for clientele including treasuries, agencies and corporations.
“When you take (ICBC) out of the marketplace, or you force them to put everything on a USB drive, that’s certainly going to alter liquidity,” he added.
HOW TO APPROACH THE BOND MARKET
It’s unclear when the issue with ICBC will be resolved, but Brenner said he still favours the U.S. bond market as a place to invest in the short term.
“I think you’re fine to buy anything now from six-month bills up to 2.5 years, but five years and out I’m not real sure as to where the next move is,” he said.
RATE OUTLOOK
Looking ahead, Brenner is calling for the U.S. Federal Reserve to cut rates by next spring or summer and is forecasting as many as five rate cuts. In this scenario, he believes buying short-term bonds right is cheap for investors.
“I would not be short anything in the fixed-income market right now,” he said.
A cyberattack on the world’s biggest bank in China caused liquidity issues in U.S. Treasuries, and fixed income experts suspect it was the cause of a weak bond market auction.
The Industrial and Commercial Bank of China Ltd. (ICBC) confirmed on Nov. 9 that it had suffered a cyberattack which prevented facilitating trades, leaving brokers severely impacted. The uncertainty is speculated by market experts to be the reason behind a weak U.S. Treasury auction last week.
“The long bond auction last week, it was a disaster,” Andrew Brenner, head of international fixed income at NatAlliance Securities, told BNN Bloomberg in an interview on Monday.
Brenner suggested that the ICBC situation was the cause of the poor auction results, as the bank dealt with ransom and couldn’t clear transactions, leading to buyers walking away from the long bond market at the U.S. auction.
“That really affects Treasury liquidity,” he said.
'AMERICAN-RUN'
Brenner characterized ICBC as an “American-run organization” within the largest bank in the world in China, which does a lot of trade-clearing for clientele including treasuries, agencies and corporations.
“When you take (ICBC) out of the marketplace, or you force them to put everything on a USB drive, that’s certainly going to alter liquidity,” he added.
HOW TO APPROACH THE BOND MARKET
It’s unclear when the issue with ICBC will be resolved, but Brenner said he still favours the U.S. bond market as a place to invest in the short term.
“I think you’re fine to buy anything now from six-month bills up to 2.5 years, but five years and out I’m not real sure as to where the next move is,” he said.
RATE OUTLOOK
Looking ahead, Brenner is calling for the U.S. Federal Reserve to cut rates by next spring or summer and is forecasting as many as five rate cuts. In this scenario, he believes buying short-term bonds right is cheap for investors.
“I would not be short anything in the fixed-income market right now,” he said.
The Industrial and Commercial Bank of China Ltd. (ICBC) confirmed on Nov. 9 that it had suffered a cyberattack which prevented facilitating trades, leaving brokers severely impacted. The uncertainty is speculated by market experts to be the reason behind a weak U.S. Treasury auction last week.
“The long bond auction last week, it was a disaster,” Andrew Brenner, head of international fixed income at NatAlliance Securities, told BNN Bloomberg in an interview on Monday.
Brenner suggested that the ICBC situation was the cause of the poor auction results, as the bank dealt with ransom and couldn’t clear transactions, leading to buyers walking away from the long bond market at the U.S. auction.
“That really affects Treasury liquidity,” he said.
'AMERICAN-RUN'
Brenner characterized ICBC as an “American-run organization” within the largest bank in the world in China, which does a lot of trade-clearing for clientele including treasuries, agencies and corporations.
“When you take (ICBC) out of the marketplace, or you force them to put everything on a USB drive, that’s certainly going to alter liquidity,” he added.
HOW TO APPROACH THE BOND MARKET
It’s unclear when the issue with ICBC will be resolved, but Brenner said he still favours the U.S. bond market as a place to invest in the short term.
“I think you’re fine to buy anything now from six-month bills up to 2.5 years, but five years and out I’m not real sure as to where the next move is,” he said.
RATE OUTLOOK
Looking ahead, Brenner is calling for the U.S. Federal Reserve to cut rates by next spring or summer and is forecasting as many as five rate cuts. In this scenario, he believes buying short-term bonds right is cheap for investors.
“I would not be short anything in the fixed-income market right now,” he said.
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