Fixed income is outperforming stocks. High-yield securities are following equities. Early in September the bond traders at Lehman Brothers decided to have a little fun. Indeed, amid a generally recovering bond market, the high-yield sector is suffering through one of its worst periods ever in part because of the same telecommunications and technology companies whose equity shares have been slammed. U.S. Treasury bonds were becoming ineffective benchmarks as supply dwindled, and the Federal Reserve Board had raised interest rates three times to try to slow an economy fueled by a surging stock market.
Sentiment is better.
It s also a business where size counts. In the eyes of clients, the biggest global investment banks continue to provide the best service, judging by the results of this year s Institutional Investor fixed-income trading poll. As a result, no firm was able to leapfrog several places on the strength of a combined operation. But none of those deals was announced in time to figure in II s surveys. Although the overall market has improved this year, it has had its share of bumps along the way.