JPMorgan Has New Theory About What Really Caused the Flash Rally

JPMorgan Has New Theory About What Really Caused the Flash Rally

Some 16 months after the “flash rally” in U.S. Treasuries blindsided Wall Street traders, little about what exactly went wrong has been resolved. The most common, albeit tenuous, explanation is that the futures market seized up that morning, creating a spillover effect into cash bonds that led to a frenetic 12-minute spike in prices. JPMorgan Chase & Co. analysts are now advancing a new theory, one they contend is a key to how to trade most effectively in today’s volatile Treasuries market. The problems on Oct. 15, 2014, actually began in…