- Wall Street executives warned trading revenue growth is slowing sharply in Q3 after unprecedented Q2 performance, signaling boom may be losing steam. Bank of America CEO Brian Moynihan said Q3 sales and trading revenue would be “flat,” causing 5% BofA share drop on announcement. JPMorgan guiding “high teens” percentage growth (vs prior year Q3); Citigroup predicting “mid-single-digit increase” for markets unit; Morgan Stanley co-president noted “3Q is no 2Q.” Goldman Sachs CEO said equities “continues to be very strong” but fixed income/currencies/commodities “a little bit softer.” Goldman shares down 7% past week on guidance concerns.
- Q2 2025 trading bonanza was exceptional: combined equities trading revenue for JPM, Goldman, Citi, BofA soared 72% year-on-year to $19.3bn, buoyed by rush into AI stocks, Asian semiconductor speculation, and SpaceX’s mega IPO. These trends have started to weaken. BofA noted slowdown in Asia financing; pullback in prime broking (lending to hedge funds, trading firms, family offices) in region. While Goldman said equities remains “very strong,” FICC expected softer. JPMorgan expects “seasonal sequential decline” following record Q2.
- Slowdown is notable given exceptional Q2 results. Daniel Simkowitz (Morgan Stanley co-president) directly acknowledged: “Second quarter of this year was pretty exceptional in markets…it’s safe to say, 3Q is no 2Q.” This represents significant deceleration from 72% YoY Q2 growth rate across big four banks’ equities trading. Article reflects shift from extraordinary conditions back toward normalized market conditions; AI-linked stock rush, semiconductor volatility, and SpaceX IPO all contributing factors to Q2 spike.
- Wall Street executives maintain structural optimism despite Q3 slowdown: JPMorgan’s Petno highlighted “much more significant demand” for prime broking and structured financing as structural trends likely to persist. Goldman’s Solomon said growth “not a straight line” but expects long-term US and global market cap to compound, supporting future financing opportunities. Executives signal slowdown is cyclical pullback after Q2 exceptionalism rather than secular demand destruction.
What Happened?
Wall Street bank executives warned Q3 trading revenue growth is slowing significantly after record-breaking Q2. Bank of America CEO Brian Moynihan stated Q3 sales and trading revenue would be “flat” (caused 5% BofA share drop). JPMorgan guiding “high teens” percentage growth vs year-ago Q3; Citigroup predicting mid-single-digit increase for markets unit; Morgan Stanley’s Simkowitz noted Q3 cannot match Q2’s exceptional performance. Goldman Sachs CEO Solomon said equities “very strong” but FICC “softer.” Q2 2025 equities trading revenue for JPM, GS, C, BAC surged 72% year-on-year to $19.3bn, driven by AI stock rush, Asian semiconductor volatility, SpaceX IPO. Asia financing activity slowed; prime broking pullback noted by BofA. Wall Street banks set to report Q3 earnings next month.
Why It Matters?
For bank shareholders, guidance suggests trading revenue decline from Q2 exceptional levels—but not secular deterioration. BofA guidance of “flat” Q3 likely reflects specific Asia headwinds rather than global trading collapse; JPM/GS “high teens” guidance suggests market leadership validated. For institutional investors, slowdown in prime broking and hedge fund lending could signal broader pullback in leverage and risk-taking post-AI stock surge. For markets broadly, trading slowdown could indicate normalization after Q2 spike—suggesting frenzied market activity around AI/SpaceX/semiconductors may have peaked. For investment banking divisions, slowdown is timing issue (Q2 boom benefited from SpaceX IPO; repeat unlikely in Q3).
What’s Next?
Monitor Q3 earnings releases (expected next month) for actual results vs guidance; if trading revenues beat expectations, it would signal guidance was conservative. Watch for prime broking volumes in upcoming quarters; if hedge fund/family office lending rebounds, it would validate JPM’s structural demand thesis. Track Asian financing activity; if BofA’s Asia slowdown eases in Q4, it would suggest regional cyclical weakness rather than structural decline. Monitor equity market volatility (VIX); if volatility rises, it could drive trading revenue higher in Q4 despite Q3 slowdown. Watch CEO commentary on cost-cutting; if banks signal expense reductions to offset lower trading revenues, it could pressure investment banking hiring. Also track CRE lending trends; if commercial real estate credit continues deteriorating, it could pressurize bank balance sheets and capital deployment for trading operations.
Affected Tickers & Coins: BAC, JPM, C, GS, MS
Source: Financial Times
