Wall Street Banks' Bond Trading Revenue Hit by Market Volatility, Equities Shine
Higher yields and rate swings reduced demand for fixed-income transactions, and Bank of America reported $109 billion in unrealized bond losses.
- Wall Street banks reported weaker fixed income trading results during the third quarter as benchmark 10-year yields reached multi-decade highs, with high interest rate volatility curbing transaction demand.
- Morgan Stanley Chief Financial Officer Sharon Yeshaya said, "Interest rates rose pretty furiously throughout the third quarter, and it was unexpected versus where the market was in the second quarter." Widening credit spreads and reduced demand for structured transactions challenged investors.
- Bank of America reported $109 billion in unrealized bond portfolio losses in the quarter ended September, up from $85 billion in June; FICC revenue fell 17% at Bank of America, 7% at Morgan Stanley, and 4% at JPMorgan.
- Equities trading desks generated significant revenue growth contrasting with fixed income weakness, with Goldman Sachs equity revenue rising 72% and JPMorgan 49%, while Citi increased FICC revenue 4% from a year earlier.
- Oppenheimer analyst Chris Kotowski warned against over-reliance on volatile equity revenues, writing, "We do fear that there is an 'easy come, easy go' risk with these revenues," in a note to clients.
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The Economic Times
Times of IndiaWall Street banks' bond trading revenue hit by market volatility, equities shine
Amidst a backdrop of volatility in interest rates and a bond market selloff, Wall Street banks experienced a downturn in fixed-income trading revenues, as Treasury yields surged to multi-decade highs. This substantial decline resulted in reduced client activity within the fixed-income sector. Conversely, firms like Goldman Sachs and Morgan Stanley thrived, reporting notable growth in equities trading revenue, showcasing the stark contrast in per…
Wall Street's big banks reported mixed third-quarter earnings on Tuesday and Wednesday. A sell-off in the bond market dragged down bond trading businesses, while equity trading posted a surge in revenue.
Rising interest burdens Wall Street banks' business. At JP Morgan, revenues from securities trading are falling. Goldman Sachs, on the other hand, exceeds expectations.
Goldman Sachs and JPMorgan recorded record results, while high rates complicate the bond business. The Wall Street entry: equity businesses outperform bonds and generate revenue of more than $66 billion was first published on Ultima Cable - World News.
Goldman Sachs and Citigroup exceed analysts' expectations. J.P. Morgan's decline in bond trading puts a strain on earnings while stock trading sets new records.
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