The world’s leading macroeconomic operators and investment banks are going through one of their worst years since the pandemic.
This 2024 has been marked by reduced margins, a challenging macroeconomic environment and limited volatility that has reduced opportunities for large financial bets.
According to data from Coalition Greenwich, revenue from interest rate and currency trading will see significant declines compared to previous years.
Hit to income in macroeconomic trade
It is estimated that more than 250 financial institutions, including Goldman Sachs, JPMorgan Chase, Citigroup and Morgan Stanley, will collectively generate $32 billion in Group of 10 rate trading.
On the other hand, revenue from foreign exchange trading will reach $16.7 billion. These figures represent decreases of 17% and 9%, respectively, compared to 2023. We see this summary in the following graph:
Economic uncertainty has been key in this decline. Surprises in economic data have defied expectations of rate cuts by major central banks. Likewise, the proximity of the presidential elections in the United States and the dismantling of popular strategies such as operations financed in yen have added more pressure on the markets.
A forced pause for hedge funds
Hedge fund activity has slowed significantly.
According to Angad Chhatwal, head of global macro markets at Coalition Greenwich, these players have preferred to take a more cautious approach. «2024 has been a year of waiting. The funds have intervened at specific times, but their continuous activity has been much less than in previous years,” he stated.
This caution reflects a change in market behavior. Operators have prioritized waiting in the absence of clear signals about the direction of the global economy. Tighter margins and increasing competition have also limited opportunities to generate consistent profits.
Technology and competition reshape the market
Increased competition, driven by the expansion of non-bank market makers, has further eroded revenues in interest rate trading. Furthermore, the growing adoption of electronic platforms has reduced transaction costs, but has also put pressure on prices in this segment.
Coalition Greenwich anticipates that fee trading revenue will continue to decline in the coming years. It is projected to decline to $30.9 billion in 2025 and $28.1 billion in 2026.
This scenario reflects a transition towards more electronic markets, where operational efficiency displaces traditional intermediation operations.
We still have a future: Currencies, the resurgence on the horizon
In contrast, projections for currency trading are more optimistic.
Revenue could increase to $17.2 billion in 2025 and $17.6 billion in 2026. This growth will be driven by the volatility that could be generated by Donald Trump’s administration, as well as an increase in corporate activity linked to rate change cycles.
“We see increased positioning in the forex market around the rate change cycle,” Chhatwal said. Corporate demand, combined with a greater need to manage currency risks, is injecting dynamism into the foreign exchange market against interest rates.
In summary: mixed expectations in a changing environment
Although the overall outlook for macroeconomic traders remains complicated, certain market segments are showing signs of recovery. The evolution of electronic commerce and the entry of new competitors are redefining the rules of the game.
Meanwhile, operators will have to adapt to a context where caution and agility will be key to navigating economic and political volatility.
This year has marked a before and after for macroeconomic markets, forcing the main players to rethink their strategies. While some challenges will persist, opportunities in currency trading suggest a resurgence in specific sectors of the global financial market.
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