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This past September, Tradeweb Markets took the first steps to address decades of uncertainty with one simple data point: a closing price for U.S. Treasuries. It may sound hard to believe, but, until then, the $16 trillion U.S. Treasuries market, the world’s largest and most liquid bond market, did not have a centralized mechanism for establishing end-of-day prices.

In this first article of a two-part series on ‘Trading ETFs in Asia’, we look at the increasing popularity of ETF trading and Asia’s approach to this asset class.

Yields dropped across most sovereign debt markets in June, amid continued central bank stimulus actions to address the economic fallout from COVID-19. Greece and Italy’s 10-year government bonds saw by far the biggest moves during the month. Both countries are eligible for the European Central Bank’s Pandemic Emergency Purchase Programme (PEPP) that was expanded by another EUR 600 billion to EUR 1.35 trillion on June 4.

The perfect storm of a global pandemic and an energy price war pushed emerging market fixed income and derivatives markets to the brink in March. As the spread of novel coronavirus and ongoing oil price war between Russia and Saudi Arabia sparked a flight to safety, credit default swap spreads (CDS) more than tripled in some markets. The massive spike in volatility, which was felt around the world, was most pronounced in Asia, Latin America and EMEA.

August’s government debt sell-off proved to be short-lived. Amid a flurry of central bank and economic news, 10-year government bond yields fell in September, with some pushed further into negative territory.

2020 has evidently been an interesting year and some unique trends occurred in the electronic marketplace for European government bonds as a result. No one could have ever anticipated or predicted a year quite like the one we've had, both the buy- and the sell-side have had to adapt quickly in order to successfully navigate these markets.

The following data is derived from trading activity on the Tradeweb Markets institutional European- and U.S.-listed ETF platforms.

Portfolio trading in credit markets continues to take shape and change the way that many clients are trading corporate bonds. As this protocol continues to evolve, we will highlight significant activity and developments within the space. In this inaugural blog post, initial observations as a result of portfolio trading in the U.S. credit market are presented which sets the table for more in-depth discussions around the evolution of efficiency and liquidity in the future .

Along with all other markets, derivatives trading was significantly affected by the pandemic and the subsequent lockdown measures adopted to address it. As financial markets entered uncharted territory, we saw volumes spike, margin calls rise and some regulation implementation dates delayed. However, the end date for LIBOR transition has on the whole stayed fixed at December 2021 (although USD LIBOR will continue at a staggered rate until June 2023), and we continue to plan and work towards a world without new LIBOR risk from January 2022 onwards. The LIBOR transition, therefore, remains an important paradigm change for the markets, with many aspects still to resolve to ensure an effective shift.

Ten-year government bond yields saw little volatility in May, with the largest move in either direction coming from France. The mid-yield on the country’s 10-year benchmark note shifted further into positive territory, ending the month nearly 11 basis points higher at 0.17%. Revised data from statistics agency, Insee, showed a decline in gross domestic product of 0.1% in the first quarter of 2021, mainly due to the inclusion of construction numbers. However, French business and consumer confidence rose by 12 points to 108 in May, the highest level since April 2018.