While fixed-income desks rack up profits at a healthy pace, the mix of trading activity is poised to shift. U.S. Treasury issuance will soon drop off. Meanwhile, private-label mortgage bonds are beginning to reappear.
A surge in tax receipts fuelled by the economic recovery is dampening the need for Treasury borrowing, the Financial Times reports. Thus, issuance will soon drop sharply from the record pace of the past two years. RBS analysts are looking for sales of new Treasury securities to come down by $90 billion by September, then shrink by $650 billion in the next fiscal year. Morgan Stanley predicts declines of $52 billion and $589 billion, respectively.
A separate FT story reports that Citigroup is marketing the first U.S. private bonds backed by new residential mortgages since 2008. The $222.4 million issue is being sold by Redwood Trust, a California REIT. They're expected to garner a Aaa rating from Moody's.
The issue marks the first return of a category of bonds that came to dominate the MBS market last decade - then became the epicenter of the financial crisis. Almost 90 percent of new U.S. residential mortgages currently carry a government guarantee through government sponsored enterprises such as Fannie Mae or Freddie Mac.
US Treasury Issuance Set To Turn Lower [FT]
Citigroup Steps Back Into The RMBS Market [FT]
HSBC Plans to Hire More Than 300 Workers in Hong Kong [Bloomberg News]
Senate Panel Approves Tougher Rules on Derivatives [NY Times]
Sen. Grassley's breaking party ranks to vote for the measure signals that a robust financial reform bill - which could include some version of the Volcker Rule - stands a good chance of ultimately becoming law.
Obama Issues Sharp Call for Reforms on Wall Street [NY Times]
The Volcker Rule to make banks divest their alternative investment and proprietary trading activities is among five "must" provisions the president will insist be part of a final financal reform bill.
SEC's Schaprio Is 'Disappointed' By Talk That Goldman Was a Political Target [NY Post]
2010 Private Equity Leadership Outlook
[Russell Reynolds Associates]
Competition Fierce for New York's First Clean-Tech Executive Education Program [Energy Weekly News, via NYU Stern]
Contenders Shape Up To Replace John Connolly - Deloitte's Big Hitter [Times of London]
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