Citigroup and JPMorgan Chase have closed down desks dedicated to handing smaller orders as Wall Street continues to cut costs on trading floors. The two banks have shuttered their odd-lot trading desks in recent months and started executing such trades electronically instead, according to people with knowledge of the
matter. 

We’re not the first firm to sound an alarm bell over liquidity in the fixed-income credit markets. Indeed, that bell has been ringing non-stop since the since the collapse of Lehman Brothers. The risk has only grown in recent years as regulations pushed market makers out of the business, in spite of record growth in the size of the corporate bond market.

The stakes are huge for Wall Street banks competing in the $22 trillion market for U.S. Treasuries and corporate debt and the $5.1 trillion-a-day foreign-exchange market. Handling fixed-income products remains one of industry’s biggest revenue generators. Now firms must disrupt the old model by building out their electronic platforms, or they risk getting sidelined in the future.

Business Insider got a look at Trumid’s investor presentation, which gives an inside look at what it’s like to start a venue that matches bond buyers and sellers using technology. As you can see from the slides, it’s not easy. Volumes, at least in the beginning, can be hard to find.

Life insurers have been moving more of their $7 trillion of investments into riskier securities, data show. That could hurt some insurers’ credit ratings in the next recession according to Fitch Ratings. 

Signs that the Federal Reserve may be done with its yearslong campaign to raise interest rates are sending ripples through fixed-income markets, holding down interest rates for a wide swath of borrowers.

“The FX market used to be dealer-driven until the banks withdrew from taking risk,” he added. “Technology developed in FX can be deployed in fixed income algos, and to provide anonymous liquidity in an agency model.”

The financial health of Britain’s companies is deteriorating toward a point where their debt risks being classed as junk, according to a measure of distress aggregated from data provided by the largest U.S. and U.K. banks. 

Defaults by Chinese companies on bonds they issued in China (“onshore” bonds, as opposed to “offshore” bonds) soared to a record in 2019, according to a report by FITCH Ratings.

• 45 companies defaulted on 117 bonds, with a total principal amount of 110.5 billion yuan ($16.3 billion)

JPMorgan Chase & Co.’s bond traders just reported their worst quarter in a decade a day after Citigroup Inc. said it was also pummeled by market turmoil.