Municipals Trading
Hi - I am an incoming HY Muni Trading Analyst at BAML/GS/MS. I have heard from everyone on the team that the desk is relatively insulated from automation due to how inefficient the market is. However, while perusing LinkedIn, I see some individuals with roles that are "Quantitative in Munis" or "Munis Electronic Trading". I did not see this in my internship, what does Muni Electronic Trading entail, and how established is it in terms of putting me out of my job?
Also, I often hear traders in munis make less. Any idea of a ballpark #, and is it for IG/HY? Just want to know what to expect if you're solid.
Hi Intern in S&T - Other, just trying to help:
More suggestions...
Fingers crossed that one of those helps you.
Robots Bought Munis Amid Record Sell-Off’s ‘Baptism of Fire’ https://www.bloomberg.com/news/articles/2020-04-20/robots-bought-munis-…
I would be a little worried. Presumably asset managers will prefer the firms that don’t step away when it gets rough out there.
Considering 2 things: 1) The incoming downgrades to states and municipalities and 2) You can't legally short munis. As a buyer of last resort, sure, robots can provide liquidity, but wouldn't you need a Market Maker who knows who's been buying the new issue deals and has the bonds? I feel like the inability to short is huge
Presumably with the proper data, infrastructure, and algorithms, you can price anything for anyone looking to buy or sell. Why couldn’t you? That’s what normal market makers do.
Instead of being able to short, presumably buying corporates as a hedge will get the job done.
I’m not in the muni space but out of curiosity how did your bank hedge their holdings? Presumably that’s the same thing you can do automatically with a quantitative model.
HY munis exceptionally tough to hedge, they are not very correlated to corps and are quite illiquid... IG on the other hand are simply spotted to treasuries, usually.
With the proper data, sure, but that's a fairly big assumption, no? For a bond market where bonds very often don't trade for months at a time, there is no "mid" to approximate with an algorithm. Say a bond traded at 103 3 months ago. Corona happened, rates slashed to zero, rumors of muni bankruptcies. How would your algo price the bond? Without more price discovery, it's simply a guess, unless you have someone who "feels" what their customers want to do. That's at least me 2c. Would be good to hear your thoughts.
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