Bond Traders Flock to ETFs, Venues and Technology to Manage Risk in Credit Markets

Bond Traders Flock to ETFs, Venues and Technology to Manage Risk in Credit Markets

With volatility spiking in global stock and bond markets, there’s been a profound shift in market psychology from chasing higher yields to focusing on risk in the credit markets, according to a recent webinar.

“Given the impact of rate hikes and supply in the markets and trade disputes, it’s really no surprise at all that clients have had some sensitivity in managing volatility,” commented Michael Noto, managing director, market structure, Barclays on the Greenwich Associates Dec. 11 webinar, “Liquidity in Credit Markets.”

Electronic bond trading platform Trumid has witnessed the shift in terms of a rotation out of riskier assets and into less risky assets, said Amar Kuchinad, chief strategy officer at Trumid.   “You can see the buy-to-sell ratio on IOIs [indications of interest] and on orders,” he said. “On days when there is a lot of market volatility, you can see there is a lot more buying interest in investment grade bonds and more selling interest on high yield,” said Kuchinad.

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