July and August revenues are thought in many cases to be below those in the same period in 2012. The weakness is believed to have extended into September.
The problem, of course, is trading revenues - witness Jefferies, which posted its fiscal 3rd quarter results a few days back - fixed income revenues were 85% down on the prior quarter.
As the Financial Times' Lex columnpoints out: 'There have been big jumps in US M&A and European IPO volumes in the year to date, according to Thomson Reuters. The problem for investment banks is that FICC is still a far bigger part of the pie than advisory work'.
Bloomberg reports that the biggest U.S. banks’ fixed-income trading revenue will probably fall 20% in the third quarter from a year ago on lower volumes, according to Richard Staite, an analyst at Atlantic Equities LLP.
Staite cut his estimate for Goldman Sachs' per-share earnings 18% to $2.47 and Morgan Stanley’s 25% to 38 cents, according to a research note Monday. Staite also cut his estimate at Citigroup by 14% to $1.05.
'July and August were very slow months as investors sat on the sidelines waiting for more clarity on Fed tapering, Syria and the emerging-market slowdown, and we believe the weakness has extended into September', Staite wrote in a note, referring to uncertainty about when the Federal Reserve would slow its $85bn-a-month bond-buying program. 'In contrast September 2012 was very active in rates and foreign exchange due to improvements in the Eurozone'.
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