How will the US rates hike affect investment banks?

Does anyone have any idea of how the US rates hike will affect the trading division of banks?

I'm guessing more volatility -> more trading

Will bond desks be more profitable? I think there are signs that FICC revenue is recovering.

 
Best Response

What a difference a year makes. Going into this year we could have had a ten page thread on this site full of confident predictions about higher rates and now, well, the only hard number i see above is someone saying he'd be "shocked" if 10y yields broke 3% by YE 2015 (that's 15 months from now). I am not knocking this view and I am not ready to be short the bond market, but we certainly have come a long way in terms of sentiment since New Years Eve 2013.

Always be wary a lazy consensus. And let's not get hyperbolic after an 11 month bond market rally...I can still think of many things far more shocking then tens trading at 3% in 15 months!

 

^Given how poor a shape the economy is in, I don't see it happening anytime soon. Things will hit the fan badly as soon as all this basically free money dries up. Sucks, but I think as long as we have a federal government that seems intent on destroying the economy and a Fed Reserve chairman that considers it their job to artificially pump the equities market - I don't see anything changing really.

"When you stop striving for perfection, you might as well be dead."
 

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