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Interest Rate Markets: A Practical Approach to Fixed Income
book

Interest Rate Markets: A Practical Approach to Fixed Income

by Siddhartha Jha
April 2011
Beginner content levelBeginner
368 pages
11h 20m
English
Wiley
Content preview from Interest Rate Markets: A Practical Approach to Fixed Income

Chapter 3

Fixed Income Markets

The fixed income market forms one of the major asset classes for investors, along with equities, currencies, commodities, and others such as real estate. The term refers to debt markets that allow issuers to raise funds for a range of needs. This chapter provides an overview of different types of fixed income markets and their characteristics. Unlike equity markets, fixed income products generally do not offer a stake in the issuer, but instead allow the investor to lay claim to a stream of cash flows from the issuer. Fixed income markets are present globally, but the U.S. fixed income markets stand out in size and dominance. Over the years, the size of the U.S. fixed income market has increased rapidly because of increased issuance from traditional sectors such as government debt as well as the emergence of new areas such as asset-backed securities. Figure 3.1 shows the total size of the U.S. fixed income market; the aggregate amount outstanding has grown rapidly over the past decade, although this growth slowed with the 2008 credit crunch as more complex, securitized markets shrank.

FIGURE 3.1 Total U.S. Fixed Income Market Outstanding Notional

Sources: Board of Governors of the Federal Reserve, Securities Industry and Financial Markets Association.

ch03fig001.eps

The U.S. fixed income market has a number of subsectors that are separated by issuing entity. The ...

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Publisher Resources

ISBN: 9781118017791Purchase book