Barbells Rule Everything Around Markets – B.R.E.A.M. Thanks to Robin Wigglesworth Financial Times for remixing my barbell thesis with a Wu-Tang classic. Dollar dollar bonds, y’all. Odd lots on one side, record block trades on the other. The squeezed middle keeps shrinking as credit markets “equitify.” The “barbell effect” long associated with equity investing is now playing out in the bond markets in earnest. see recent FT oped in the comments building on work at Morgan Stanley
Bravo to the Barbell HvS! It’s been a core theme throughout my sell-side days and sticks with me today. It’s come to fruition and it’s about to redefine allocations in fixed income as well!
I think my life would be complete if someone published a quote of mine mashed into some rap lyrics
Huw van Steenis Robin Wigglesworth ...but is this not a natural consequence of how the market now manages money? (which of course may be the point of the article). If more money flows into large tracker funds driven by an industry championing passive rather than mid-sized active funds, juxtaposed by private client trading on the other side, then a barbell would naturally result from a hollowed-out middle market reinforced by ever increasing forced buying at the extremes? (reinforcement, incidentally, is one of my preferred definitions of a bubble; enforced, compulsory buying).
Came for the Wu-Tang, stayed for the insight. Great piece Huw van Steenis and something we see playing out in UK institutional DC who are building defaults with lowest-cost to deliver passive at the core and specialist/private markets for alpha. The squeezed middle of traditional active is left trying to protect ya neck. It’s coming to wealth next.
🔥
C.R.E.A.M…Perhaps the greatest song ever written about M1.
When does your album drop?
Vice Chair
1moMore here - the barbell tolls for fixed income investing: https://www.ft.com/content/ffc4c1f5-ff71-451f-a8cc-e278c267c279