Thiam Signals Liquidity Concerns, Echoing Dimon’s Bond Warning

Tidjane Thiam, who will take over as chief executive officer of Credit Suisse Group AG next month, said investors should expect sharp moves in some markets as a result of tougher regulation, echoing comments by JPMorgan Chase & Co. CEO Jamie Dimon.

“Regulation has structurally reduced liquidity in many key markets,” Thiam said in an interview on Bloomberg Television on Wednesday. “You can expect liquidity incidents. I think Jamie Dimon was right to underline that in his letter. That’s a structural issue in the new world we live in.”

Dimon, in a letter to shareholders last month, called a roller-coaster day in Treasuries on Oct. 15 a “warning shot” to investors and said the next financial crisis could be exacerbated by a shortage of the securities. BlackRock Inc. Vice Chairman Philipp Hildebrand has since echoed his remarks, saying that credit markets face a risk of seizing up.

“The market doesn’t like change,” Thiam said. “It settles very comfortably in an environment, as extreme as it is, it’s gotten used to it. And when things change you get all these expectations that get adjusted, you get the fact that people are piled up in the same trades.”

Global bond markets have tumbled over the past week as investors question the sustainability of rallies that pushed rates to record lows, amid signs price growth is reviving.

Thiam, who is currently CEO of Prudential Plc, will replace Brady Dougan at the Zurich-based bank next month.

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