5 Questions with Tom Hartnett

Tom Hartnett
Tom Hartnett Head of Fixed Income Division
January 28, 2021

1. The pandemic has created a tremendous need for liquidity. How has your department handled the demand?

I am pleased to say that Mizuho’s ability to respond to client needs for liquidity, financing, yield enhancement, and hedging solutions has become even stronger during the pandemic. Management worked closely with sales and trading to ensure that each strategy was understood by all team members and we encouraged looking for ways to adapt the strategy, if needed.

In addition, we substantially increased daily & weekly market calls internally and with clients and integrated the firm’s economic views early and often – (Chief US Economist) Steve Ricchiuto’s prescient and clear market views have been really important for us.

Finally, the division’s ability to respond to changing demands received strong support from our partners in all the functions – IT has been the backbone of our connectivity and that resilience is remarkable. In addition, the strong connections with all the functions including Risk, Operations, Compliance, and Legal, have been vital to our responsiveness.

2. What have been the top fixed income trends in 2020 and how do you see things evolving in 2021?

After the initial shock lower in interest rates and risk assets in March, along with the extraordinary fiscal and monetary supports introduced during that time, the key trends in fixed income have been: adapting to the low-for-long Fed policy, creating yield enhancement strategies, and, increasingly, hedging against the potential resurgence of inflation and a weaker dollar.

These macro themes are profound and likely to persist for a very long time. However, after the very strong Fixed Income returns of 2020 (most aggregate indexes returned around 8%), 2021 will likely produce fewer trending markets and more tactical trading opportunities.

Products with yield and spread will be in high demand for the months ahead – these include Securitized and Corporate credit along with Emerging Market products. On the macro side, including Rates & FX, the focus will be hedging the structural risks that have resulted from the pandemic, including emergent inflation and a weaker dollar. Municipal products have also seen strong demand and we have been fortunate to capitalize on this with our relatively recent entry into that market.  There is a lot of opportunity for issuers and investors. As a result, the quantity and quality of our conversations with current and potential clients continues to get stronger.

3. How have you kept your team connected while working apart?

At a high level, we increased the frequency of communications and made efforts to form more overlapping groups where our strategies, priorities and perspectives can be shared. On any given day, we are operating with a blend of high-frequency 1-on-1 chats, phone calls with smaller groups on in-depth topics, and video meetings with larger groups on strategy.

We are also hosting more internal events for the whole team on specific developments within the division, via Town Halls, Product Teach-In’s, and industry deep dives on topics such as SOFR.

The intensity of that operating model is quite high but it’s great to hear concepts and topics repeated in different forms and to see how a strategy or idea reflects through the organization – when that happens we know it’s working well.

4. How has this affected the team dynamic?

This pandemic and the challenges it has produced for everyone has really changed the way we know each other and work together – for many people there have been times where personal and business life have collided and, in some ways, we are more connected now than before.

Most of us are juggling new responsibilities, such as home schooling, day care, and tending to the needs of family members confined to the home, for example. The increased communication among teams helps us cover for one another and I think we are more tightly integrated as a result.

5. The ability to spend more time at home has prompted many to explore new hobbies or indulge more in favorite ones. Have you spent your free time differently this past year?

I’m grateful to have more time with family and have enjoyed the opportunity to return to some of my “Engineering roots” in building several machines and other things this year. Like many in the pandemic, I’ve spent much time with the family on Lego projects – by this point we have probably assembled over 20,000 pieces. I’m also committed to fitness and have tried to keep that going – while there are no gyms on the immediate horizon, I’m trying to stay flexible - literally and figuratively.

Back to top