Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

The Decline of Goldman’s Bond Traders

Goldman Sachs
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Goldman Sachs is led by a commodities and currency trader.

But Goldman’s commodities, currency and bond traders don’t make anywhere near as much money for the firm as they once did.

Lloyd Blankfein, Goldman’s chief executive and chairman, started at J. Aron, a commodities trading firm that Goldman had acquired in the early 1980s. Soon afterward, the fixed income traders at Goldman started to make serious money for the firm. Goldman became a Wall Street powerhouse in trading bonds, commodities and currencies.

Even in the aftermath of the credit crisis, traders in the division Goldman called FICC—fixed income, commodities and currency—were raking it in. In the first three months of 2010, FICC traders made $6 billion.

But then the brakes came on. Fixed income made just $3.3 billion in the second quarter of 2010. The third quarter saw another drop down to $2.6. The fourth quarter saw a decline down to $1.6 billion.

There was an odd resurgence in the first quarter of 2011. FICC took in $4.3 billion that quarter. Many wondered if the Goldman traders had got there mojo back.

But it was not to be. The following quarter, fixed income trading revenue declined back down to $1.6 billion. And in the third quarter, trading revenue was just $1.7 billion. Lower, even, than Goldman earned as a market maker in stocks.

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