Improved FICC driven by FX and Rates?
Credit (especially IG) trading volumes lost further momentum in September but Q3 14 total trading volumes are still 12% higher than last year (down 9% sequentially). With rising rates, decline in Credit could stretch out into Q4 14 as well. At the same time, Rates and FX could benefit from rising volatility. We think this has already been the case, as indicated by banks’ upbeat comments on quarterly trading performance.
Strong equities despite markets moving sideways
In Equities, European cash (Q3 up 14% y/y and down 10 q/q) and derivatives volumes (Eurex up 28% q/q and 6% y/y) are rather on the stronger side. In the US, cash volumes showed a similar picture (down 8% q/q but up 15% y/y), while options volumes look a touch lighter (up 3% q/q and 8% y/y). If higher volatility holds up, the strength could be maintained in Q4 14 as well (especially against easy Q4 comparables last year).
September IBD comeback still leaves Q3 14 on the weaker side
September brought significant pick-up in ECM and DCM and further slowdown in M&A. On a quarterly basis, the situation is different: M&A improved somewhat but debt and equity origination suffered a meaningful decline. We are concerned whether DCM volumes will hold up against the backdrop of rising rates and volatility.