Bit by bit

F1 teams and bond traders both use tech to eke out small gains for big wins Formula One races are won or lost through small decisions and small actions. Each decision to pit, brake or overtake adds or subtracts milliseconds that could mark the difference between victory and defeat. So, too, in bond trading a…

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Riskiest Higher Education Bonds See Gains as Vaccines Rev Up

The expansion of the nation’s vaccination campaign to younger adults is bolstering the outlook for higher education bonds amid growing optimism for a more normal return to campuses in the fall. Source: Bloomberg The Bloomberg Barclays index of the riskiest municipal securities for education — which includes those sold for student housing and other facilities…

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Fed’s Waller: Rise in Bond Yields Reflects Economic Recovery

Fed Governor Christopher Waller says the U.S. central bank should not intervene to obstruct the market reacting to the brighter U.S. economic outlook. Source: Bloomberg “If we saw a lot of disorderly performance in longer-term yield markets, we might have to step in just for financial stability reasons once again” “But right now the movements…

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Investors Worldwide Are Tiptoeing Back Into U.S. Corporate Debt

Asian and European investors are showing early signs of renewing their demand for longer-term U.S. corporate bonds, after yields have started stabilizing, and the result could be better performance for the securities. Source: Bloomberg Tuesday saw the most overnight demand for U.S. corporate debt since October 15, with more than $359 million being sold to…

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Dysfunctional Credit Markets – Still Waiting On The Fed

As the week ended, U.S. credit markets appeared confused, if not outright dysfunctional. The 10-Year Treasury yield began February at 1.09% and reached an interim peak of 1.54% on February 25. Then it retreated to 1.42% as markets thought the rise had simply been overdone. Source: Forbes But Fed Chair Powell’s refusal to assure financial…

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Bond investors add liquidity to credit risk in a desperate search for yield

Modeling likely best-executable pricing for high-yield bonds that trade once every two weeks requires aggregating vast amounts of data from multiple sources in a credit market fragmented across many trading venues and dark over-the-counter dealing. Source: Euromoney In January, Overbond announced an agreement to take settlement data from Euroclear for bonds that trade away from…

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Bond trading finally dragged into the digital age

Some trends quietly fizzle out without leaving a mark. Others implode, with everyone wondering what on earth we were thinking — like Tamagochis or fidget spinners. Occasionally, a halting, haphazard trend suddenly hits a point where it starts spreading like wildfire, and its success feels like it was always preordained. Electronic bond trading fits the…

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E-Trading in Credit – Poised for Ramp-Up

Strong flows and growing demand for market data, trading tools and protocols should increase electronification of credit markets, the laggard in fixed income, even as work-from-home norms adjust. Historically low rates and compressed spreads have driven the search for efficiency, which also favors e-trading, and a Gary Gensler-led SEC would likely push to improve credit-market…

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