It’s been the busiest June, July and August ever for Treasury traders, judging by transactions on the $12.8 trillion market’s biggest electronic trading platform.
Thanks to volatile global markets and a shifting outlook for interest rates, there was more trading during the period on ICAP Plc’s electronic BrokerTec system than any corresponding stretch in its 15-year history. Humans and computers have been hustling to react after the Greek debt crisis came to a head and China’s currency devaluation sparked a rout in equities.
"The market moves quicker, and there’s more volatility," said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc. "We never seem to be able to focus on our economy, because the rest of the world is so messed up. That’s the biggest issue with this market right now."
An average of $183 billion of Treasuries traded on BrokerTec daily in August, according to a report Thursday from ICAP, which accounts for more than 60 percent of Treasuries transactions. That exceeded the 2015 average of $171 billion, and marks the most frenetic pace for that month since 2007.
The data measure ICAP’s share of the electronic interdealer market, where dealers and high-speed trading firms operate. Electronic trading has taken a bigger share of the market in recent years, according to Tabb Group LLC.
As global stocks plummeted Aug. 24, more than $650 billion of Treasuries changed hands, making it the fifth-busiest day on record, according to ICAP data compiled by Bloomberg. Yields on the benchmark 10-year Treasury briefly slid below 2 percent that day for the first time since April.
"Unknowns and uncertainties drive these gappy moves, which is what we’ve been getting," Roth said. "It becomes much more of a crapshoot when you’re trying to figure out what a stock market decline means."
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