What are the on-job trade conversations in fixed income S&T?
Hi guys, I've got a quick question to the guys on the fixed income sales desk (or trading).
I wanted to know what are the conversations between the clients and sales (or sales -> traders) are when doing a trade.
(I used to work as a FX sales, so let's say a lifer would come in and say 'buy 50 usdjpy, work it') Obviously there are a lot more products as a fixed income sales, but just curious what are the actual trade requests in the conversations are from the clients. Any examples of IRS, credit, gov bonds, or something common in the market would be great.
Cheers
So inventory runs are just snapshots of all of the inventory offerings a dealer has. The function is RUNZ in BB. Every dealer sends out an O+O run in the morning (stands for own and offer) and that’s what sales will use to pitch product. Also start learning what takedown increments are. Sales credit is always paid in eighths. So if a dealer sends out an O+O run in the morning, and you see something like “JPM 4’s of 21 come L1/8” that means the dealer is allowing a 1/8th concession. I hope these are some useful examples for you.
Honestly the only place you’ll learn about this stuff is on the job. I think something you CAN teach yourself is spreading (And it’s quintessential for doing the job, you will be asked in interviews as well). What spreading is, is taking YTW of a bond and subtracting it from its comparable treasury - this gives you its spread. Memorizing spreads helps you learn about what’s trading cheap, and what’s rich (Denoted as “+spread”, I.e. +20). It also will help you pitch relative value ideas to clients. Say you see your client owns a AAA FNMA 3’s 1/16th of 20 at +10 and syndicate is offering a similar FNMA of similar credit quality at +20. You automatically can pitch to a client a swap, where the client will put their bond out for the bid and take in the bond you pitched. These are actionable things you can teach yourself.
the standard language for the bond market is
client xyz to sales: hey john, offer me 100mm 10yr notes sales to trader: client xyz asking for an offer on 100mm 10yr notes trader: "at 15+" sales to client: "15+ offer" client to sales: "i'll buy those" sales to trader: you can do that trader to sales: thats done sales to client: thats done...you just bought 100mm 10yr notes at 15+