MarketAxess’ fourth quarter profit falls on hit from Treasury investments

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(Reuters) – Bond trading platform MarketAxess Holdings reported a 6% decline in fourth-quarter profit on Thursday, partly due to an unrealized loss on its U.S. Treasury investments.

The hit countered gains from higher commissions MarketAxess pocketed as investors proactively optimized portfolios to manage risk, boosting trading volumes.

Shifting expectations of interest rate cuts kept the Treasury market active as investors assessed the impact of inflation data and a new administration.

Total credit average daily volumes — a measure of the average daily number of bond transactions on MarketAxess’ platform — rose 6% from a year ago to $13.88 billion.

Total fourth quarter revenue rose 3% to $202.4 million from a year earlier, helped by a 2% rise in commissions, which form the largest part of the company’s revenue mix.

Inflationary pressures from U.S. President Donald Trump’s tariffs and the possibility of budget deficits due to potential tax cuts may delay future rate cuts from the Fed, further boosting uncertainty and volumes in the fixed income markets.

The company, however, reported a $1.9 million unrealized loss on U.S. Treasury investments, compared with a gain of $0.9 million in the fourth quarter of 2023.

It reported a profit of $65.1 million or $1.73 per share for the three months ended Dec. 31, compared with $69.6 million or $1.84 per share from the year-ago period.

MarketAxess operates an electronic exchange platform used by institutional investors and broker-dealer firms to trade U.S. treasuries, corporate bonds and other fixed-income securities.

The average daily trading volume for U.S. government bonds on MarketAxess’ platform was up 61% from a year ago at $25.95 billion during the fourth quarter.

The quarterly average daily trading volume for emerging markets credit climbed 18% from a year ago to $3.46 billion.

(Reporting by Ateev Bhandari in Bengaluru; Editing by Sahal Muhammed)