Domestic and international bond markets returned to favour in the first quarter of 2008. A report from Morningstar indicates the domestic bond index jumped 2.21%, while hedged international bonds chalked up a 2.72% return for the quarter.

Citigroup’s credit sector specialist, Mark Reade, says corporate bond volumes are also strong, with the banks and AAA Kangaroo issuing at lofty levels. “It’s been so strong that almost AU$20bn in corporate bonds have been issued already this year, which compares favourably with the AU$21.6bn issued by this time last year.”

While bond market strength might help insulate jobs for debt capital markets bankers, it isn’t doing much for traders.

Luke Heath, chief executive of Chandler Heath Executive Recruitment, says traders whose skills are restricted to bond pricing have fallen out of favour: “But if a trader can trade swaps as well, then there’ll be more demand. If they can price CPI bonds, that’s also very attractive.”

As for earning potential, Heath says a trader with five to seven years’ experience can earn between AU$200k and $275k, inclusive of bonus: “Bonuses will be between 70% and 200%, if they have done some proprietary trading.”

Tim Larkworthy, a banking and financial services consultant from Hudson, agrees that the subprime crisis has affected trader demand. “While there hasn’t been any great shedding of positions, [employers] are being cautious about putting people on.”