Wall Street macro traders prepare for the worst year since the pandemic - Bloomberg
Kyiv • UNN
Global banks forecast a 9% decrease in income from currency trading and a 17% decrease in interest rates compared to last year. Coalition Greenwich expects a further drop in betting revenue until 2026.
Global banks are preparing to report the lowest income from currency trading and rates since the pandemic, due to tighter margins and a difficult macroeconomic background, Bloomberg reports, writes UNN.
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According to data compiled by Coalition Greenwich, more than 250 companies, including Goldman Sachs Group Inc., JPMorgan Chase & Co., Citigroup Inc. and Morgan Stanley, are projected to receive a total of $32 billion from trading Group of Ten (G10) bets and $16.7 billion from currencies. This is about 17% and 9% less than last year, respectively.
Investor confidence in major macroeconomic deals has declined this year as unexpected economic data sharply undermined bets on interest rate cuts by the world's largest central banks. The uncertain US presidential election and the winding down of the once popular yen-funded carry trade deals have also shaken markets.
"2024 has become a year of sitting and waiting on the sidelines," said Angad Chhatwal, head of global macroeconomic markets at Coalition Greenwich. "Hedge funds have entered the market from time to time in connection with certain data points and events, but they have not been as active on a consistent basis compared to previous years.
Macroeconomic trading revenues have also been hit by tighter margins this year, Chhatwal said, amid growing industry competition and advances in e-commerce putting pressure on prices.
Coalition Greenwich predicts that betting trading revenues will decline further to about $30.9 billion in 2025 and $28.1 billion in 2026, as non-bank market makers expand their presence and bonds catch up with the electronics of other markets.
Meanwhile, the results of currency traders are expected to improve to $17.2 billion in revenue in 2025 and $17.6 billion in 2026. The US administration of Donald Trump is expected to increase volatility in the foreign exchange market of $7.5 trillion per day.
"We see that there is a lot more positioning going on in the foreign exchange market around the rate cycle," Chhatwal said. "Corporate activity is also becoming more sustainable, and this has a much greater positive impact on the foreign exchange market compared to rates.
