CMC Markets, a leading global provider of online trading and technology solutions, expects some interesting developments in the Fixed Income market.
Fixed income products have been an integral part of the CMC Markets product suite for more than twenty-five years. Back in the 1990’s, aggressive interest rate management by central banks made this an appealing asset class for many looking to trade on a short-term basis, but after more than a decade of consistently ultra-lax monetary policy, the lack of volatility here pushed treasuries from favour with this cohort.
However, it seems likely that the market is now poised for something of a renaissance, with two key factors coming into play, CMC says.
The primary driver is set to be the fact that globally, Central Banks are now taking a more activist approach in terms of managing monetary policy. This presents more diverse views over the timing of interest rate hikes, resulting in heightened levels of volatility, especially around key central bank announcements. Short term traders see opportunity whilst those invested for the longer term have a corresponding need to manage portfolio risk.
There’s also a growing awareness of trading bonds in the broader retail market, especially in the UK. Investing in fixed income products is arguably more common in many other jurisdictions, but structural reform does seem to be afoot, part of which at least has been catalysed by Brexit.
CMC Markets forecasts that, as a result, awareness of the asset class is poised to increase sharply, leaving brokers that can provide access to fixed income markets as part of a comprehensive product offering at a natural advantage.
CMC Markets Connect currently offers access to 55 different sovereign bonds of assorted expiries, covering major markets including the US, UK, Germany, Japan and the Eurozone. In addition, the list of instruments includes the French-issued Euro OAT and the Italian Euro BTP, providing additional trading opportunities for those looking to trade off the delta between national and supranational outcomes.
Institutional counterparties can access fixed income products from CMC Markets Connect over the usual channels. Feeds can be delivered through the FIX API or offered as part of CMC Markets’ comprehensive white-label platform. The same fully configurable reporting tools are available as is the case with FX, Indices and Commodities, whilst cross-margining is also part of the multi-asset proposition.
More information on this topic can be found here.