Who is having a bond crisis?

The crisis in bond trading has been well forecast. Many have noted the steep drop in dealer inventories and the dramatic expansion in corporate issuance over the last 5 years. There must be a problem coming for investors.

This past week Morgan Stanley missed estimates in large part because of lower bond trading revenue. So did JPMorgan. So did Citigroup. So did Goldman.

Yet we find the bond investor universe still scrambling to find bonds. The UST 10 Year is solidly inside of 2%, and spreads are tracking that rally well enough.

So far the crisis in bond trading is a problem for the sell-side, not the buy-side. Rally on.