Wall Street's Bond Traders Could Be In for Even More Trouble, Fitch Warns
Unless volatility ticks back up, bond trading revenue is about to plummet again, Fitch says.

Fitch Ratings analysts warned Wall Street that "another drop in FICC net revenue" is on its way, continuing the decline in bond trading revenue that weighed on investment banks during the second quarter, Financial News London reported.

Goldman Sachs (GS) , Morgan Stanley (MS) , JPMorgan Chase & Co (JPM) , Bank of America/Merrill Lynch (BAC) and Citigroup (C) are all about to get hit with further declines in sales and trading revenue from fixed income, currencies and commodities, which account for 42% of investment banks' revenues, Fitch said. The spiral will continue well into September.

The big banks suffered a steep decline in bond trading revenue as volatility dried up following President Trump's inauguration. Volatility has ticked up this month, but FICC revenue will stay down unless volatility stays up, Fitch wrote. The CBOE VIX Volatility Index (VIX.X) reached records last week but is down over 21% Monday mid-morning.

Fitch said Wall Street should expect more "robust" performance in equities sales and trading and capital markets underwriting and M&A advice with "strong IB advisory backlogs."

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