For a brief moment, it seemed that things were getting better. June was a good month for banks' sales and trading businesses. When JPMorgan presented its second quarter results last month, CFO Marianne Lake said activity seemed to be coming back for a few weeks in June, but that the increase in activity "hadn't increased into July so far."
July is now over. And as banks review the full month, it's becoming apparent that July wasn't very good at all. Earlier this week, Trushar Morzaria - Barclays CFO - said that July was possibly the worst month of the year for Barclays investment bank. Now Deutsche Bank's banking analysts are sounding a cautious alarm.
In a note released today, they point out that July is always a weak month in banking, but that July 2014 seems to have been weaker than usual. Fixed income currencies and commodities (FICC) revenues seem to have suffered particularly. Primary issuance of asset backed and mortgage backed securities were down 19% and 42% year-on-year respectively, says Deutsche. High yield and investment grade issuance were both down 14%. FX and rates volatility declined - again. The signals are not good.
Even equities businesses aren't doing as well as they might be. Deutsche points out that although IPOs were up 115% in July 2014 versus July 2013, the comparators are favourable. - July 2013 was a weak month, so it's to be expected that July 2014 will be strong in comparison. More worryingly, Deutsche points out that the ECM pipeline has declined 26% over the past two months, which it says will "bear watching."
Where does this leave banking jobs? In particular, where does it leave banking jobs in firms (like Deutsche Bank) which have resisted serious cost cutting and redundancies in the hope that revenues will bounce back? Deutsche's analysts say it's too early to say. "A weak month or two will often be followed by strong catch-up month... We can't read too much into Q3 activity levels," they say.
FICC bankers especially need to hope they're right. With luck, July was an anomaly.