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Lisa Abramowicz

Myth of the Endangered Market Maker

Piece of scary data doesn't spell doom for credit trading.

There’s a popular idea circulating on Wall Street that trading desks no longer have any money to help clients trade and that’s why it’s becoming more difficult to maneuver in the $8 trillion U.S. corporate-bond market.

The concept is rooted in recent Federal Reserve data showing dealers with a net short position in corporate bonds at the end of October, which leads people to think they have no inventory with which to trade. The development set off alarms among market participants and followers. But the data, while striking, is not a true portrayal of the health of the market.