Holed up in a Hyatt hotel room in the Caribbean, John McClain whipped out his laptop on Sunday afternoon and started trading bonds. This was supposed to be a family vacation for McClain but, with bank failures piling up and US authorities rushing to stem the panic, that was out now. He needed to overhaul the $2.4 billion portfolio he managed for clients at Brandywine Global Investment Management and overhaul it fast.
In Manhattan, Craig Gorman saw what was coming, too. He raced over to his hedge fund’s Park Avenue office and fired up his computer at 6 p.m. For three straight days, Gorman, a founding partner at Confluence Global Capital, would trade nearly non-stop, eating as he stared at his 11 monitors and sneaking in naps that would end abruptly when pings alerted him to sudden price swings or news.
There have been many wild weeks in the history of finance but few in recent memory quite like this one. As jitters rapidly spread about the health of the banking sector from the US to Europe — a concern that had barely registered for most investors just days earlier — markets shook. There were sudden moves in prices for bank stocks, corporate debt and commodities but nowhere was the chaos more acute than in the $24 trillion market for US Treasuries.