Michael P. Regan, Columnist

Goldman Sachs Joins the Trading Party

A couple of solid quarters offers hope but doesn't eliminate doubt.

October 18, 2016 at 5:11 PM UTC

Michael P. Regan is the global team leader for cryptocurrencies at Bloomberg as well as a former senior markets editor and former Americas team leader for Bloomberg's Markets Live blog. He has covered Wall Street for Bloomberg News as a columnist and editor since 2007. He previously worked for the Associated Press.

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Goldman Sachs offered more confirmation on Tuesday that the sun was once again shining on Wall Street's fixed-income trading desks.

Revenue from executing client orders in FICC -- fixed income, commodities and currencies -- jumped 49 percent to $1.96 billion in the third quarter, excluding accounting adjustments in the same period a year earlier. That led a surge among the four large banks with big trading desks that have reported results so far.

The year-over-year gains are a bit misleading on their face, considering the third quarter of 2015 was an ugly period for trading desks after China's unexpected devaluation of its currency ushered in a volatile stretch in markets that many clients may have chosen to sit out.

And in the latest quarter, clients of all banks may have been either forced into action to some degree, or at least found plenty of one-time reasons to trade: the Brexit vote took place just before the quarter began, and looming regulatory changes in the $2.6 trillion money-market industry caused a reshuffling of money between funds as well as a large move higher in Libor rates.