Almost 20 years ago, when Susan Estes was running Deutsche Bank AG’s fixed-income desk in New York, she’d field calls from clients looking to put on $4 billion spread trades in the U.S. Treasury market.
Plenty has advanced from those days. Trades don’t require a phone call anymore and are executed faster than ever, and the Treasury market itself is four times as big as it was. But one key element has regressed: Banks’ willingness to take on risks of that size. To get the same rate as Estes would’ve charged on that $4 billion trade, clients today could only pull off $250 million, she said.