U.S. banks have reported. European banks are ready follow from the middle of next week, but really there's NO NEED. We already know that fixed income traders have had an unimaginably great quarter and a fairly great year, as have debt capital markets bankers. Equally, we already know that equities professionals would probably prefer to put 2016 behind them.
Sadly, omniscience is never what it seems. Not all fixed income traders had a great quarter and some equities traders had a worse time than others.
Deutsche's European banking analysts have concocted a method of measuring how things are really going for different businesses by aggregating various measures of trading and deal activity. They've assimilated their findings in the two charts below, which suggest the performance of particular desks and divisions in Q3 2016 on a quarter-on-quarter and year-on-year basis.
If Deutsche is right, there are (at least) four places you don't want to be sitting in an investment bank now. They are:
- European equity derivatives
- European index equity derivatives
- European equities
- U.S. equities.
This is where 2016 is going very badly. Not only were revenues significantly down year-on-year (figure 12), they were down quarter-on-quarter (figure 11). European equity derivatives have it worst: there, trading volumes fell 50% between the second and third quarters of this year.
By comparison, Asian equities are looking up. Equity capital markets bankers can also look back upon a solid three months.
Meanwhile, in the happy hyper world of fixed income trading, conditions for U.S. investment grade and high yield bond traders declined in the third quarter compared to the second, and FX traders had a sad quarter however you cut it.
Divisional performance, Q2-Q3 2016
Divisional performance, Q3 2015-Q3 2016