Major Wall Street banks reported a significant slowdown in fixed-income trading as bond prices fell and interest rate volatility increased. Treasury yields surged to multi-decade highs, reducing client activity and creating a challenging environment for trading desks. The downturn featured prominently in recent quarterly earnings reports. Higher rates also increased unrealized losses on banks’ own bond portfolios.
In the third quarter, Bank of America’s fixed-income, currencies, and commodities (FICC) revenue fell 17%. Morgan Stanley’s FICC revenue declined 7%. JPMorgan’s fell 4%. Goldman Sachs’ FICC revenue was flat. Citigroup’s FICC revenue rose 4%, largely on foreign exchange and spread products.
The results mark a reversal from the recent trading boom.