By Justin Baer
Executives from some of the biggest asset managers told the Bank of England's new governor on Monday that financial markets should close for two weeks as the world confronts the coronavirus pandemic, people familiar with the matter said.
Speaking on a conference call with BOE Governor Andrew Bailey, several executives raised the possibility of a shutdown during a wide-ranging discussion on the state of the markets and the financial-services industry. A majority of those on the call, though, said they didn't think shuttering the markets would help address the deepening crisis, the people said.
Mr. Bailey, who began his term as governor on Monday, held the call with senior executives from some of the world's biggest asset managers, including Vanguard Group, BlackRock Inc., JPMorgan Chase& Co. and Bank of New York Mellon Corp., people familiar with the matter said.
It couldn't be learned which asset manager executives wanted to close the markets and which did not.
Steve Mnuchin, U.S. Treasury secretary, said Tuesday that the White House plans to keep financial markets open, though "we may get to a point where we shorten the hours." He said he had discussed the markets with bank executives and officials at the New York Stock Exchange, and "everybody wants to keep it open."
On the call with Mr. Bailey, the executives delivered a grim assessment of the credit markets and urged the central bank to take additional steps to support the banking system as it confronts the fallout from the pandemic.
Many riskier securities, including junk bonds and emerging-market debts, were now near impossible to trade, they said. They recommended steps that would make it easier for companies and other issuers to refinance their debts.
U.S. stocks fell sharply on Monday, with the Dow Jones Industrial Average posting its second-worst day in the benchmark's history. Trading was halted for 15 minutes shortly after the opening bell, marking the third time in six sessions that a selloff had triggered the marketwide circuit-breaker. By midafternoon on Tuesday, the benchmark stock indexes had regained some of those declines.
The yield on the 10-year U.S. Treasury note rose to 0.870%, from 0.722% Monday. The U.S. government bond market has been unusually volatile in recent days, reflecting investors' growing anxiety as well as the liquidity constraints surfacing in various corners of the market amid the broader rout.
Spreads on corporate bonds, or the extra yield investors demand over Treasuries, has been increasing at an unprecedented speed, Morgan Stanley analysts said.
The NYSE and other U.S. stock markets closed in 2012 as the nation contended with Superstorm Sandy, and in the aftermath of the September 2001 terrorist attacks.
On Monday's call with the asset management executives, Mr. Bailey acknowledged the need for central banks to address the markets' liquidity needs and the challenges posed by traders working from home as governments seek to contain the virus's spread, people familiar with the matter said. Working outside their trading floors had further diminished the banks' appetite for taking on risk, the executives said.
The Federal Reserve said Sunday it had adjusted a program with other central banks, including the Bank of England, to make U.S. dollars available overseas at near-zero interest rates.
On Monday, the Fed unleashed a series of additional moves to stabilize markets, slashing the benchmark interest rate to near zero and agreeing to buy $700 billion in Treasury and mortgage-backed securities. And on Tuesday, the Fed said it would establish a lending facility to help support short-term commercial debt.
On Monday's conference call, the executives told Mr. Bailey that most mutual funds weren't yet facing a stampede of outflows from either big institutional clients or individual investors, and the ongoing stability of those assets under management was critical to their industry's health.
--Andrew Restuccia contributed to this article,
Write to Justin Baer at email@example.com