Financial markets today are becoming more interconnected, and this has led to changes in the nature of financial transactions. As a result, the roles of banks and nonbank financial institutions have changed. They have become more sophisticated and are able to acquire more foreign investment information, which has fueled the rapid growth of international equity and bond markets. Diverse institutions have also emerged as major players in financial markets, creating new financial instruments and making it easier for investors to participate in global transactions.
In addition to stocks, financial markets also provide funds to companies that want to finance growth. Bond markets offer funding to companies through bonds. Money markets facilitate short-term debt financing. Derivatives and insurance markets provide means to manage financial risk. In addition, foreign exchange markets facilitate the trading of foreign currencies. Financial markets today are diverse and vast.
The New York Stock Exchange alone trades trillions of dollars in securities every day. There are many different types of markets, from the secondary market to the primary market. The primary stock market deals with new issues of stocks. The secondary market, on the other hand, deals with securities already listed in stock exchanges.
Despite a quiet session yesterday, markets are now focused on the surging US dollar and the upcoming Fed rate hikes. The EURUSD and the GBPUSD are on the verge of parity, while the Chinese renminbi has fallen below 1.2000. Meanwhile, the longer-term US treasury yields are near their range highs and a significant pull to the upside could mark the end of recent complacency.