Market volatility related to the coronavirus has provided a welcome boost for Wall Street banks' trading businesses, helping to offset the much-bigger drag of lower interest rates on lending profits, analysts said.
Meanwhile, bond investors who for weeks had been expecting rates to rise had to rush into 10-year U.S. Treasury bonds last week to protect against a possible recession as pressure built on the Fed to cut its key rate target. However, volumes on Tradeweb Markets Inc jumped 47per cent last month, the electronic-trading platform said on Wednesday. Similarly, online trading platform CMC Markets raised income projections on Tuesday due to higher volumes.Those that rely on lending as a main source of income are likely to see significant pressure on net interest income , the difference between what banks pay for the money they borrow compared with what they get from lending or investing in securities.
That is especially true for banks like Goldman Sachs Group Inc , which does not have sizeable businesses in traditional areas the way competitors like JPMorgan Chase & Co , Bank of America Corp and Citigroup Inc do. Even its closest rival, Morgan Stanley , has a huge wealth-management operation to cushion profit swings caused by trading.
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