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The sorry state of today’s bond traders

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It’s not the best time to be a bond trader – that much is obvious. Liquidity in the market is lousy and new capital requirements are making trading less profitable. The fact that the Fed continues pumping money into the economy while keeping interest rates low hasn’t helped either. But no one knew it was this bad.

A new Bloomberg report on the current state of bond traders is downright depressing. It’s not just the numbers – bond trading is down a massive 22% over the last five years with liquidity plunging 70% – but also the people stories. Even big names with great resumes who can earn job offers find themselves back in the market in a matter of months.

Jon Bass, a former bond trader at Solomon Brothers, just landed his fifth job in five years, according to the report. He spent five months at Mizuho Securities, a year at defunct brokerage firm MF Global and less than two years at BTIG. Bass just took another job at Jefferies as a senior sales executive. Likewise, fixed income specialist Lee Fensterstock has had at least five jobs since leaving Jefferies in 2007.

And they may be the lucky ones. Headcount is down roughly 30% since 2010, with Credit Suisse, Deutsche Bank and UBS doing much the pruning. Compensation has followed. Pay fell anywhere from 25% to 50% during that period, depending on the job title. Compensation consultant Johnson Associates says that bonuses will be down as much as 15% this year.

Perhaps the most interesting part of the report is that the industry, understandably, is seeing no new blood. Twenty and thirty-year-olds are choosing other career paths, leaving the same old candidate pool for the same old jobs. Hence the slow-moving, rather depressing game of musical chairs.

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We turned to a few investment bankers and consultants in their 30’s with plenty of experience crossing oceans and pitching deals the next day. Here are a few pieces of advice they imparted.

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Goldman’s new mobile app suggests you won’t succeed at a banking interview if you haven’t given consideration to these four points.

Yale Wins (WSJ)

Yale’s investment team won the Ivy League endowment battle for fiscal year 2014, reporting a 20% investment return. With a 15% return, Harvard fell short but still beat expectations considering their investment chief is getting the boot after several mediocre years.

Tough Day at the Office (Bloomberg)

Barclays was fined twice in one day by U.S. and U.K. authorities for compliance failures within its asset and wealth management units. Not what Barclays needed.

Pimco ETF Under Scrutiny (Dealbook)

Investigators are looking into whether Pimco artificially manipulated the value of Bill Gross’s flagship exchange-traded fund to make it look more profitable.

More Chatting Opps For Bankers (Financial News)

Users of Thompson Reuters instant messenger service will now be able to chat with contacts registered with Markit Collaboration Services, an open messaging network set up by a number of banks. That puts 250,000 more financial professionals in the Rolodex of Thompson Reuters users. And more pressure on Bloomberg.

Hedge Fund Purging? (FIN Alternatives)

Another big pension fund has cut assets allocated to hedge funds. First Calpers, now the Teacher Retirement System of Texas. Could be a trend.

Buzz Around the Office

Thanks For the Boots (Bloomberg)

Retiring Yankees shortstop Derek Jeter was given a lot of crappy gifts from other teams to celebrate his career. Things like Yankee-themed cowboy boots and custom-painted kayaks that he has already likely thrown out. But he’ll still be responsible for the taxes on those gifts – to the tune of $16,000. Luckily for him, that accounts to two innings worth of work.

Quote of the Day: “For every 10 of them there’s going to be three or four left. What’s the timeframe? Well, everybody I know is looking for a job — not looking for a job, looking for a career.” – Michael Maloney, president of fixed-income recruiting firm Michael P. Maloney, to Bloomberg on the market for bond traders

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