The effect of the vibrant trends in the sector of market-making services on economic marketplace depends on the fact that how really are these trends compared along with the changes in demand for these particular services. Even though the need for fixed income instruments has always continued to grow that added a true means of income towards the central banks’ and other related public financial areas involved in the purchase of debt securities.
Further, amidst the evolving bond markets, there has been a significant flow of fund to the concerned market participants who are in need of the immediacy services like a mutual fund and hence, there occur a noticeable growth and demand for the market making process. In fact, many market participants are even adjusting their business strategies to tackle the problem arising from expensive and cheap immediacy services offered in some markets. But the bond issuers have always kept an incentive to find ways to enhance the secondary market liquidity for their issues. This post points out the key developments made in these areas.
- The expansion made in the primary bond market
The established growth of a primary bond type of markets over the recent years has rammed the volume of debt securities to outstanding record levels. Many factors had influenced this expansion.
- The independent debt issuance has grown significantly as a result of governments’ increased spending in contrast to global financial slowdown. In addition, in some sectors, they provide capital backstops to the regional banking systems to fight the economic crisis.
Such monetary policies conducted to back up the economic recovery had decreased the interest rates to exceptional levels and has adopted unfamiliar steps targeting directly at the medium to lengthy ends of the outcome curve and thereby funding to spreads and credits.
- The continuous demand for debt securities has triggered the backing conditions in a corporate bond market. This has even increased the private bond issuance in many of the major emerging economic markets and other non-financial corporates. Further hand, this has led to contractions in many jurisdictions to improve efforts to deleverage the balance sheets.
- The significant effect of investment funds
It is a common fact that the low yielding bonds are always associated with risk-taking. Under a given small sector of the secondary market liquidity contained with high yielding instruments, the bond funds offer cash flow on an endeavor basis.