As everyone who has not spent the past six months in a cocoon or broadband notspot will know, fixed income trading has done particularly well in the first half of 2009.
JPMorgan thinks 2009 will be a record year for fixed income revenues, with a 34% increase predicted over 2008.
Equally, Credit Suisse analysts said in a note released this week that thanks to a combination of strong inventory gains, reversal of last year's losses, healthy client volumes and wide bid/ask spreads conditions for fixed income currencies and commodities trading businesses are, 'as close to perfect as could reasonably be expected.'
Who's most likely to benefit most from this fortunate combination of events? As far as European banks are concerned, it looks like being Deutsche bankers. As the chart below from Credit Suisse shows, only Goldman derived a higher proportion of its revenues from fixed income trading in the first quarter.
Source: Credit Suisse (click to expand)
Given their emphasis on fixed income trading, it's probably no coincidence that Goldman and Deutsche Bank were the best paying institutions in the first quarter. This looks likely to remain the case for the rest of the year.