‘Unknown unknowns’: Anxious weekend for traders amid Credit Suisse’s fall from grace

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LONDON/NEW YORK– 6am wake-up calls. Cancelled tennis dates. Anxious check-ins on bond prices while walking the dog.

These are just some of the scenes of traders and money managers over the weekend as the finance world braced for the next, and perhaps, final act of Credit Suisse Group AG’s stunning and spectacular fall from grace.

For a second straight weekend, traders across the world, from London to New York and São Paulo, were glued to their mobile phones and laptops, watching the news, convening impromptu Zoom calls and waiting for marching orders – on high alert in the wake of yet another banking crisis.

Last time, it was Silicon Valley Bank, a US regional bank to startups. This time, it’s Credit Suisse, once a titan of Switzerland’s all-important banking industry.

Except for over-the-counter trades in bonds, there was little for most traders to actually do with markets closed, as Swiss officials and UBS AG raced to put together a deal for all or parts of Credit Suisse. Yet a quiet sense of dread over “what comes next” for the broader banking industry – and the global economy – once markets reopen Monday was palpable nonetheless.

“Credit Suisse and the US regional bank situation raises concern about what we don’t know,” said Trevor Bateman, head of investment-grade credit research at CIBC Asset Management. “We have been spending time over the weekend to consider possible scenarios, outcomes and second- and third-order implications from these outcomes. And the unknown unknowns.”

Many worked from home, a now-familiar Covid-era routine. Some still headed into the office and organised conference calls. Goldman Sachs Group Inc. and Morgan Stanley were among the bond desks open over the weekend, according to people familiar with the matter. A representative for Goldman declined to comment, while Morgan Stanley didn’t immediately respond to a request for comment from Bloomberg.

Since bonds are traded over the counter, they can technically change hands at any time. But it’s highly uncommon for trading to take place over weekend.

Still, there were unusual levels of activity in bonds of both SVB and Credit Suisse. At least two sets of price quotes on Credit Suisse bonds were sent out on Saturday, copies of which were seen by Bloomberg. The senior bonds were being quoted higher b...

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