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Aladdin Aladdin. Our Company and Sites. Asia Select Site. Sign In. Fixed Income Strategies. Our fixed income solutions cover:.

MarketAxess: In focus: Systematic fixed income trading strategies

Reasons to partner with BlackRock for fixed income: Breadth of insights: We have a team of more than fixed income professionals, providing extensive global coverage of global bond markets. With 21 primary investment centres worldwide, our investment teams also benefit from a firm-wide, collaborative investment culture that promotes information sharing across asset classes and regions.

The best data wins Data is a key prerequisite to creating and running systematic strategies. Without data, the strategy cannot build or subsequently respect a rules-based structure. Reflecting on traditional systematic trading products in other asset classes, each one typically has robust and available data which, in several cases, is drawn from trading exchanges and then applied to the strategy. However, recently this has changed as fixed income electronic platforms have been able to enrich existing data sets and build sophisticated data tools.

The fixed income credit market does not have trading exchanges like those in equity markets.

MarketAxess: In focus: Systematic fixed income trading strategies - The DESK - Fixed Income Trading

Instead it relies heavily on voice execution and, increasingly, electronic trading systems. This shift in execution structure means that bond trading venues like us possess an increasingly valuable data set from which we can build more sophisticated and insightful tools. Regulatory rules have also given us access to data, such as TRACE, that we can then analyse and enrich to create data sets not previously available in fixed income credit.

A mix of enriched TRACE and historical data alongside AI-powered pricing analytics can create compelling pictures of prior market activity and predictive pricing indicators. That gives systematic funds the ability to assess opportunities across sectors, industries and even individual bonds. We have worked with several clients to develop a consultative approach that leverages the expertise of our own data scientists and their analytics tools to help appraise and validate the potential opportunity for a systematic fixed income trading strategy.

And to then help to build the right pipes to allow the strategy to consume the right data once live. So, to finish: Data allows systematic funds to see through the fog, establishing the validity and viability of the strategy. The same data then allows assessment of live market opportunities, framed within the rules of the strategy.

It is the enrichment of existing data, alongside the construction and development of bespoke data solutions, which has helped fill data gaps left as a result of different regulatory regimes or comparably opaque market trading dynamics and data capture. These continued improvements in data leave clients with systematic fixed income credit strategies with cleaner, clearer signals upon which to execute. Sign in. Log into your account. Forgot your password? Password recovery.

If you're new here, please click here to get my FREE page investment banking recruiting guide - plus, get weekly updates so that you can break into investment banking. Thanks for visiting! FICC groups at banks employ more people and generate more revenue than Equities groups, and they may offer advantages in terms of the work and exit opportunities — if you make it in:. We covered the basics in our feature on Equity Trading , but banks make money from agency trades and making markets for clients. So, you must divide this trade into smaller pieces, buy portions from different parties over time, and also earn something from commissions and fees.

This example uses corporate bonds, but Fixed Income also includes government bonds, credit-related derivatives, money markets, mortgage-backed securities, and more. But Sales is a separate division from Trading, and the two are quite different; trading is more about the execution of orders and market-making for clients, while sales is about developing client relationships, pitching ideas to clients, and representing the firm on important business issues.

Reasons to partner with BlackRock for fixed income:

Sales is suitable for outgoing, social people who like to read and talk about financial markets, while trading is a better fit for those who like math and can thrive with a quick, decision-making mindset. You could also say that Structuring is a separate team within Fixed Income, given the complexity of some products.

What is Fixed Income Trading?

The key difference is that Structurers work on longer-term projects rather than the day-to-day work that most traders spend their time on. Finally, Strategy is a separate group in some markets divisions. The rule of thumb that we presented for Equity Trading holds true here as well:. The good news is that many Fixed Income products are complex; the bad news is that simpler areas such as investment-grade corporate bonds are still being automated.

The process for Fixed Income recruiting is largely the same as it is for Equities: expect an online application, video or on-campus interview, and a Superday U. Therefore, we are not going to describe every single desk, group, and sub-group here. In short, the rates desk trades sovereign government-issued bonds, interest rate swaps and futures, and structured products based on rates, options and swaps, and others.

CFA Level 1 Fixed Income Trading

This desk is very macro-focused because interest rates drive the prices of government bonds and other products here, and everything from economic growth to trade and monetary policy to exchange rates could affect interest rates. Municipal bonds are ones issued by local governments such as states, counties, and cities rather than the federal government. Interest on municipal bonds issued in the U. Municipal bonds have the same characteristics as other bonds: yield, coupon, maturity date, and credit rating, and you can find issuances covering almost every time horizon.

Local trends, such as population metrics, demographics, tax collection, non-tax revenue sources, and property values make a big impact on the creditworthiness of the issuer, which, in turn, drives municipal bond prices.

Our fixed income solutions cover:

On the other end of the yield curve, insurance companies, specialty buyers, and retail investors are more active. If you want to learn more, MunicipalBonds. Since most companies have a significantly higher risk of default than governments in developed countries, corporate-bond yields are higher to compensate for the risk.

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  3. Fixed Income Sales vs. Fixed Income Trading vs. Structuring vs. Strategy.
  4. You can value bonds by assessing the default probability of the firms that issue them and then comparing the coupon rates on bonds to prevailing market rates. Of all the desks within FICC trading, the corporate bonds one is the most micro-oriented. While you do need to be aware of broader economic happenings and monetary policy, company-specific events tend to make a bigger impact on corporate bond prices.

    Some banks are automating corporate-bond trading and switching to electronic systems, but this has happened at a slower pace than in Equities. Small orders e. The foreign exchange market is far bigger than the ones for Equities and traditional Fixed Income products, and the U.