Donald Trump is always looking for something he can take credit for. Think about how many times he’s bragged about soaring small business confidence for instance.
Well, we’re going to throw him a softball on Thursday. Have a look at these charts:
So what you’re looking at there is basically corporate bond market liquidity which, as anyone who frequents these pages knows, has been steadily declining since 2008.
Now why do you imagine dealer inventories and trading suddenly spiked? There are probably a lot of explanations, but we’d be willing to go out on a limb and say it has something to do with the promise of looser regulations on Wall Street. As it turns out, Goldman agrees:
Corporate bond trading volumes have also picked up (see right panel Exhibit 1). The top three busiest weeks for investment grade trading volumes in the post-crisis period have all occurred in 2017, which likely reflects higher levels of dealer inventories in addition to the robust activity in the primary market. Again, the key ingredient to this pick-up is likely to be the prospect for a relaxation of bank regulation, with banks anticipating less strict controls on the extension of risk.
Of course there’s a prerequisite for laying claim to this “positive development” and we’re not sure Trump meets it…