Bank trade banks are making money from Trump's rate chaos

Copyright © HT Digital Streams Limit all rights reserved. Annamaria Andriotis, The Wall Street Journal 4 Min Read 15 Apr 2025, 08:23 AM IST Tariff-driven volatility increases Wall Street trading gain despite the fear of economic slowdown. Summary Goldman Sachs, JPMorgan and Morgan Stanley all saw large jumps in trade income. Goldman CEO David Solomon said the bank’s trading customers were even active in the midst of economic uncertainty. Wall Street earns even more money from trading than during the Covid-19 era of the market. Goldman Sachs, JPMorgan Chase and Morgan Stanley all said that a boom in the revenue of trade helped their profits in the first quarter and beat expectations. Banking trading banks fetch more fees from investors scrambling to lower the risk in their portfolios on any new clue on how President Trump’s rates can finally play. Together, the three banks earn more than $ 12 billion in fees in their equity businesses, the desks operating stock market-related activities for customers. It is at the top of the trade boom that followed some of the worst days of the pandemic. The jump came even before Trump’s “Liberation Day” announcements sent markets in a tail spin on April 2. Stock markets then had a massive one-day rally after Trump interrupted most of its so-called reciprocal rates. Wall Street executives warned that Trump’s rates and the uncertainty around them could push the economy into recession. This would harm their businesses by leading to a setback in corporate loans and trade. For the time being, Wall Street expects commercial banks to benefit. “We are early in the quarter, but so far the business is performing very well and customers are very active,” Goldman CEO David Solomon said on Monday during a call with analysts. “And so, I know that there is a higher level of uncertainty, but at the same point they are active, people move positions, and we still see significant activity levels.” Although the revenue from fixed income, currency and commodity trading was not so great in the first quarter, Trump’s recent tariff movements urged more volatility in Treasury. Currencies are also currently driving a lot of trading volume, Solomon said, adding that the bank sees ‘exceptionally high, record activity levels’. At the beginning of the year, investors and bankers were clumsy about the incoming Trump administration. Many investor portfolios were positioned for so -called US exceptional trade, expecting that US equities and the dollar will continue to accelerate. At the end of March, the S&P 500 and Nasdaq Composite have fallen to their worst place of residence since 2022 after Trump’s escalations on rates and traders reconsider their expectations. More recently, customers from US exposure traded and raised their bets on international assets, also according to Europe and South America, according to bank managers. All the turns in policy are more trading. Goldman booked a record quarter for its equity industry in the first three months of the year, with an income of 27%. JPMorgan said last week that stock trading revenue increased by 48% to a record high, while Morgan Stanley had a 45% jump. “The animal spirits are still there, insofar as people are trying not to get off guard,” Morgan Stanley CEO Ted Pick said during a call with analysts last week. Banks noted that the activity in equity derivatives was especially large in the first quarter, as investors have dumped for volatility. Goldman’s financing chief Denis Coleman said the firm had continued to see “significant demand” for financing its markets customers. Too much volatility can become a problem for the banks for too long, as it can encourage customers to put completely on the sidelines. But so far, bankers say the market has not shown signs of panic. “What we heard about our colleagues in Markets is that it actually functions quite smoothly,” Jeremy Barnum, head of finance in JPMorgan, said last week. Robin Vince, CEO of Bank of New York Mellon, also said the trade that has seen his bank is not clients who liquidate positions, which would indicate that they are leaving the markets. Vince told analysts on Friday that “many of the activities by people who collected cash to repay do not raise cash, just to have more dry powder on the sidelines.” Bankers said the volatility forced them to ask hedge fund customers for more collateral to be placed, in some cases hundreds of millions of dollars. But even there, the bankers say the clients could provide the funds and not delay their activities. Investors will watch banks again on Tuesday when Bank of America and Citigroup earn earnings. Solomon said clients were concerned about what was expected for the near and long -term, which limited their ability to make important decisions. It weighed broadly on investment banking. Goldman nevertheless said that the backlog of the transactions is on a quarter-over-quarter basis, and other banks said they expected a setback later. A top Goldman banker said that a slowdown in the headings that restore global trade would be needed. Goldman bankers held calls with CEOs of the company over the weekend to brainstorm how many market stability would be needed before the initial public offers and other transactions could continue. Write to Annamaria Andriotis on [email protected], capture all the business news, Market News, news reports and latest news updates on live currency. 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