Global trading revenue for banks drops to pandemic-era lows
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Banks are headed for their weakest year in trading revenue since the pandemic, with numbers that scream struggle. Coalition Greenwich estimates that over 250 global firms will scrape together $32 billion from G10 rates trading and $16.7 billion from currency trades in 2024. That’s a 17% and 9% drop, respectively, from last year. Heavy hitters like Goldman Sachs, JPMorgan Chase, Citigroup, and Morgan Stanley are in the same boat. The culprits? Razor-thin margins, shaky investor confidence, and an economic backdrop that makes Wall Street look like a casino with bad odds. Economic whiplash hits trading desks This year, traders have been second-guessing every macro call. Economic data has been yanking forecasts like a yo-yo, and bets on interest-rate cuts from major central banks have turned into painful missteps. The U.S. presidential election, which feels more like a reality TV season finale, hasn’t helped. Add to that the collapse of yen-funded carry trades, and markets are jittery, to say the least. Angad Chhatwal, Coalition Greenwich’s head of global macro markets, summed it up: “2024 has been a year of sitting and waiting on the sidelines.” Hedge funds, the usual thrill-seekers, have barely dipped their toes in, popping up sporadically around major data dumps or market-moving events. If traders were looking for clarity in economic data, they delivered the opposite. In the U.S., the Federal Reserve’s go-to inflation gauge (the personal consumption expenditures price index) rose in October. Part of the jump came from higher stock prices inflating fees for portfolio management. Strip that out, and inflation cools to 2.4% from 2.8%. But the Fed doesn’t care about “what ifs.” These numbers will likely justify its decision to stop rate cuts. Treasuries liked the news, with yields dipping as a result, but stocks stayed mostly quiet. Even so, JPMorgan is talking big,…
Filed under: News - @ November 29, 2024 10:25 am