The glossary entry on bonds has, finally, been published. Just follow the link. The draft I published a week or so ago was amended slightly after discussion with Clive Parry.
Clive then suggested that a second entry on bond markets was required and prepared a draft, which I have edited and now published as well. Again, just follow the link.
I am grateful to Clive for his input into this process.
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It would be interesting to know how many numerate people make a living from the margin they get trading government bonds. I don’t have a problem with corporate bonds as there’s an incentive for the issuers to keep the margins tight.
There do seem to be a lot of people having a party who could otherwise be teaching maths or IT if this hog roast didn’t exist.
Not as many as you might think.
First, you do need gilt traders (as well as corporate bond traders) because end investors need to buy and sell. Buyers and sellers very rarely match and the market-makers (GEMMS in the UK) intermediate this process (taking the risk that they may or may not be able move bonds on at a profit).
How many? There are about 17 GEMMS and each will have at most half a dozen gilt traders so, probably fewer than 100 people are gilt traders.
Of course, there is then a whole raft of people involved in settling trades, monitoring risk, liasing with investors, ensuring compliance with regulations etc. – and those numbers have exploded since my days working as a market maker.
Finally, there are investors… lots of them… and some of them are going to be speculators.
Thanks
All journalists covering economics should be made to read these entries.
Wow
I think I understood it.
What a fantastic explanation.
Liberating.
Thank you.
Bonds seem a helpful thing, gives a safe place for pension funds and helps governments regulate the economy, wondering why do MSM and politicians say beware of the bond market, etc?
Thanks
Worth it then