Kwasi Kwarteng's exit follows strong quarter for some traders
Kwasi Kwarteng is out as UK chancellor but his brief tenure at the top of the UK economy may have been helpful for some trading desks at US investment banks.
Citi, JPMorgan and Morgan Stanley reported third quarter results today and all said revenues in their macro trading businesses, which cover foreign exchange and interest rate derivative products, had particularly good quarters.
The UK hasn't been the only story on macro desks, but it has been the main story. Running from July to the end of September, third quarter trading results include banks' profits made from making markets for clients around the time of Kwarteng's "mini budget" of September 23rd, plus sterling volatility during the following week.
JPMorgan said today that "higher revenue in macro businesses" was "partially offset by lower revenue in Securitized Products" business. Morgan Stanley cited "strength in macro products on high client engagement and volatility in the markets," as the source of the 33% year-on-year increase in its fixed income sales and trading revenues in the third quarter.
Citi is the only of the three banks to split out macro trading revenues from weaker credit trading revenues. Citi said today that revenues in its macro trading division rose 18% year-on-year in the third quarter. Revenues from trading spread (credit) products were down 39%.
The Financial Times suggested earlier that Sajid Javid, a former CDO banker at Deutsche Bank, would replace Kwarteng as he's the only one close to Truss with any credibility in the markets. In fact, the successor is Jeremy Hunt, a former management consultant, PR man for an IT firm and English language teacher in Japan.
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