Published:
Bank of America expects third-quarter investment banking fees to fall more than 10%; shares slide
Bank of America’s CEO says investment banking fees are likely to decline by more than 10% year-on-year in Q3 while trading revenue is roughly flat, signalling a softer capital-markets environment after a strong Q2.
Bank of America’s CEO, Brian Moynihan, told analysts that the bank expects a materially weaker quarter for investment banking. The bank projects third-quarter investment banking fees to fall by more than 10% compared with the year-earlier quarter, while trading revenue is expected to be roughly flat.
The outlook is contrasted with a strong second quarter: investment banking fees rose 50% and trading revenue rose 33% year-on-year then. Moynihan also said the investment banking market is generally down about 10%, while Bank of America expects to be down “probably a bit more,” citing how it is positioned across businesses with more activity.
The CNBC story frames the message as potentially an early signal that Wall Street’s boom in advisory and trading linked to the AI-fuelled capital markets surge is losing momentum. That matters for FX indirectly: softer capital-markets activity can be a read-through to narrower issuance and deal activity, which often coincides with tighter financial conditions and changes in risk appetite.
What to watch next is whether other banks and market intermediaries report similar year-on-year deterioration in investment banking revenues, and whether trading volumes or spreads show parallel weakness—signals that would help determine whether this is a temporary quarter-to-quarter dip or a broader shift in the financial cycle.
Why this matters for FX
A downgrade in near-term investment banking fee momentum and a roughly flat trading outlook points to weaker activity in US capital markets, which can spill into broader financial conditions and risk sentiment. If this reflects a broader slowdown in corporate advisory and dealmaking (including in AI-related activity), it can affect expectations for growth and the demand for risk assets—channels that typically feed into FX via changes in global USD funding demand, volatility/risk appetite, and interest-rate expectations.