- A bear market in bonds will crimp trading revenue at Goldman Sachs (GS -0.6%) and Deutsche Bank (DB +2.4%) says SocGen, explaining its initiation of coverage on the two banks with a Sell rating.
- "We expect FICC weakness to be an ongoing structural theme - not a temporary issue - in a rising U.S. long interest-rate environment ... As investors veer away from the bond bear market,” look for money to flow into equities, says the team, starting UBS at Buy.
- Look for Goldman to curtail its capital return program thanks to regulatory limits on leverage, adds SocGen, and for (Hold-rated) Credit Suisse (CS +1.7%) to take action to boost its own ratios. “There is no getting away from regulatory pressure and the burden it places on investment-bank business models."
SocGen: Bond bear market to hit Goldman and Deutsche the most
Jan 7 2014, 15:48 ET