An early look shows trading revenue still a struggle at IBs

An early barometer for the investment banks (GS, MS), Jefferies Group - now a part of Leucadia National (LUK) - estimates investment banking revenue rose 42% this quarter from a year ago, but fixed-income revenue continues its weak trend, falling 17%.

Speaking at an investor conference yesterday, Citigroup (C) CFO John Gerspach said he expects trading revenue to drop by a "high mid-teens percentage" this quarter. His comments come days after JPMorgan - at its investor day - flagged continuing trading revenue weakness on the order of a 15% decline. Prior to the JPMorgan meeting, analysts had been expecting a decline more on the order of high single digits.

"It sounds like more bloodletting on Wall Street,” Mercer Capital's Jeff Davis. “What we are seeing is a function of investors being scared of bonds because the math is bad. No one I talk to wants to take a chance adding bonds to the portfolio.”

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