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Alternative Theory on Corporate Bond Liquidity – ViableMkts (Chris White)

Author: \ September 7, 2017 \ 2 Comments
Full Article: ViableMkts

Regardless of your position, settling this debate is critical because the US corporate bond market is the most systemically important market in the financial world. If there is a liquidity problem, it is vital that we identify the causes and begin to implement solutions.

Comments
  • Charlie
    CharlieSeptember 10, 2017"Definitely an interesting discussion and compelling set of facts. As the article states, the concept of liquidity is a difficult one to pin down precisely. But there are some clearly wrong ways to look at it, such as based solely on realized trading activity, another good point made in the report. Opportunities to trade is also a tough one, since it's a bit of a joint test of liquidity and REASONS to want to trade (which requires some volatility, or some other catalys…"
  • Wolfman
    WolfmanSeptember 8, 2017"As usual, another Viable Markets insightful article. I think the lack of liquidity in the corporate bond market is a function of low rates, pressure on capital at risk, the introduction of ETFs and transparency impacting market making opportunities. The fixed income markets are, in general, less prone to reacting severely to market news and geo-political shocks. There have been any number of news items that should have had this markets reeling, and for the most part,…"
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2 Comments on "Alternative Theory on Corporate Bond Liquidity – ViableMkts (Chris White)"

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Wolfman
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Wolfman
As usual, another Viable Markets insightful article. I think the lack of liquidity in the corporate bond market is a function of low rates, pressure on capital at risk, the introduction of ETFs and transparency impacting market making opportunities. The fixed income markets are, in general, less prone to reacting severely to market news and geo-political shocks. There have been any number of news items that should have had this markets reeling, and for the most part, they are shrugged off. People trade to make money. If the ability to do so decays, trading activity decays and liquidity decays. Looks… Read more »
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3 years ago
Charlie
Member
Charlie
Definitely an interesting discussion and compelling set of facts. As the article states, the concept of liquidity is a difficult one to pin down precisely. But there are some clearly wrong ways to look at it, such as based solely on realized trading activity, another good point made in the report. Opportunities to trade is also a tough one, since it’s a bit of a joint test of liquidity and REASONS to want to trade (which requires some volatility, or some other catalyst). And while it’s intuitively compelling that the growth of trading activity should track the growth of the… Read more »
Vote Up0Vote Down  Reply
3 years ago
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