New York: The world’s banks are on track to report their lowest earnings from foreign exchange and exchange rate trading since the covid-19 pandemic, impacted by tighter margins and a challenging macroeconomic backdrop, according to Bloomberg News.
More than 250 firms including Goldman Sachs Group Inc., JPMorgan Chase & Co., Citigroup Inc. and Morgan Stanley are expected to earn a total of $32 billion from trading Group-of-10 interest rates and $16.7 billion from currencies, according to the data collected by the Greenwich Coalition.
“These numbers are respectively around 17 percent and nine percent lower than last year,” said the report, as quoted by Xinhua, Saturday, November 30, 2024.
Investor confidence in making big macro decisions has plunged this year as surprising economic data has made bets on interest rate cuts from the world’s major central banks uncertain.
US presidential election shakes markets
The apparently tight US Presidential election and the end of once-popular yen-funded trading also rocked markets, according to the report.
“2024 is the year to sit and wait on the sidelines. Hedge funds have entered the market sporadically based on data and events, but they have not been consistently active compared to previous years,” said Angad Chhatwal, head of global macro markets in the Greenwich Coalition.
The Greenwich Coalition estimates interest rate trading revenues will fall further to about $30.9 billion in 2025 and $28.1 billion in 2026 as non-bank market makers expand their presence and as bonds pursue the electronification of other markets.
Meanwhile, the revenue performance of currency traders is estimated to improve to USD 17.2 billion in 2025 and USD 17.6 billion in 2026.
“Donald Trump’s administration is expected to trigger volatility in the foreign exchange market worth USD7.5 trillion per day,” explained Angad.