Why did fixed income do so well in 2019?
Read a bunch of articles recently talking about how a lot of banks were boosted by fixed income trading in 2019, but none of them really explained why. Would really appreciate some help in understanding the reasons behind it!
idk. the fed restarted large-scale asset purchases (remember, its not QE guys). perhaps that's a factor.
Ok thanks
de nada
Three rate cuts in 2019 drove down rates and fueled reach for yield, increased liquidity drove down spreads. IG returned around 12% (duration and spread tightening drove rtns), HY 14% , Treasuries around 7% avg across maturities, and Leveraged loans around 6%. For bank props desks that run on near infinite leverage those returns are magnified many times over and so some traders generated 100s of millions in P&L if the had the right trades on. Credit Hedge funds as with most hedge funds by and large massively under performed the indexes.
I see, thank you very much!
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