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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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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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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Junk Traders Shift From Old Habits as Electronic Market Expands

Electronic trading is finally taking off in the junk-bond market, where instant messages, phone calls and close-knit relationships have long defined the way of doing business. MarketAxess Holdings Inc. saw high-yield trading jump 52% last month from a year earlier to a record $1.9 billion in average daily volume, the company said last week. Rival…

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The Bond-Trading Revolution Is Real This Time

Bond markets have for years been seemingly close to a tipping point when it comes to electronic trading, yet they could never quite breakthrough. Yet those who closely follow technological advances and market structure were unwavering. “The slow and steady change that has occurred over the past decade will ultimately be seen for the revolution that…

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Bond Traders Struggle to Pick Winners in Riskiest Markets

Discerning investors could eke more gains out of developing-nation bonds, but the bulk of the rally in the riskiest corners of the market may have passed. Source: Bloomberg The gap between spreads on emerging-market high-yield debt and global peers has narrowed from a record 470 basis points in May to 127 basis points, close to…

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The promise of AI in corporate bond trading

For Vuk Magdelinic, using artificial intelligence in corporate bond trading is more than a promise — it’s a reality. “We can automate 30 percent of a trader’s entire trading workflow,” says the CEO of Overbond, a fixed income AI analytics company. “So, if I’m a trader and I trade 300 transactions a day, 100 out of…

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