According to Reuters, July is normally when Wall Street bond traders take a break to soak up some sun -- but not this year. The showdown over the federal debt ceiling in Washington threatens to trigger a default on Treasury debt -- however temporary -- and may keep trading desks staffed throughout the month, said Jim Caron, Morgan Stanley's global head of interest rate strategy.
"We've got to be 'all hands on deck,' particularly in July and August ... The fireworks really start and we are very concerned about it," Caron said at the Reuters 2011 Investment Outlook Summit in New York. He added that the bank is telling staff to stick around this summer.
The U.S. Treasury Department has urged Congress to increase the $14.29 trillion ceiling before August 2. A missed coupon or some other technical default would surely wreak havoc at bond trading desks, Caron said. "When we built our systems and our risk metrics, we never built in the fact that the U.S. Treasury might miss a coupon payment."
Find out more at:
http://www.reuters.com/article/2011/06/07/us-investment-summit-bondpayment-idUSTRE7565XC20110607
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