Goldman Sachs bond traders weathered a disastrous spring — and they’re likely to face major heat from CEO David Solomon to get their act together this summer.
Earlier this week, the Wall Street giant reported blowout earnings overall, but revenue in its bond-trading division fell 10% in the first quarter – missing analysts’ expectations by a whopping $910 million.
“It was basically just a function of the overall environment making markets,” Goldman CFO Denis Coleman said Monday, as shares in the bank fell as much as 4%.
Since then, however, Goldman’s big-bank rivals have reported blockbuster revenues across the board from trading bonds, also known as “fixed income” investments — a major embarrassment for Goldman brass.
JPMorgan said it saw fixed income trading revenue jump 21% to $7.1 billion – its second-best result ever. Morgan Stanley’s bond business jumped 29%. Citigroup’s fixed income revenue jumped 13% to $5.2 billion.
At Goldman – where its fixed income, currencies and commodities business, or FICC, has long been seen as an outperformer – the division’s revenue came in at just $4 billion.
“It seems that something went wrong at Goldman in fixed income,” Wells Fargo analyst Mike Mayo told CNBC.
“I’d imagine that at Goldman, a fire is being lit under the traders, managers and risk overseers in FICC after such an underperformance.”
A spokesperson for Goldman pointed The Post to Goldman Sachs president John Waldron’s comments at a Semafor event Wednesday.
“In the period of time when you have a lot of volatility around rates in particular and commodities, you can get in traffic where things don’t go your way at any given moment in time,” Waldron said.
“You have to end the quarter at a certain date and you show what happened. If you look at it in the fullness of time, I have no concerns about our FICC business.”
Goldman declined to provide further comment.
Goldman’s fixed income desk has generated outsized returns for decades, gaining the bank a reputation as a trader’s firm that can withstand market turbulence.
Some insiders speculated that Goldman got hammered on trades tied to interest rates, as many firms earlier this year expected at least two rate cuts in 2026, according to a CNBC report citing anonymous market participants.
The war in Iran has sent oil prices soaring and reheated inflation fears, which could potentially keep the Federal Reserve locked in “wait-and-see” mode for longer.
Some traders have even priced in small odds of a rate hike this year – though Fed Chair Jerome Powell has said he sees no need to raise rates yet.
“Goldman Sachs underperformed peers in fixed income because it was more exposed to directional trading risk in rates and credit in this very volatile quarter,” Ken Mahoney, chief executive of Mahoney Asset Management, told The Post.
“We believe this appears to be more of a positioning and execution issue than a structural breakdown in the business, and subsequently the market realizes that, and the stock is acting well.”
Shares in Goldman Sachs ticked up 0.6% Thursday.
On Monday, the bank posted net income of $5.63 billion on revenue of $17.23 billion for the first quarter – beating analyst estimates of $16.97 billion in revenue.
Earnings per share of $17.55 also came in above expectations of $16.49.
During a conference call later Monday, Solomon said dealmaking activity has remained resilient – but warned the bank is closely tracking developments in the Middle East.
“If the resolution of the conflict drags, that probably will be a headwind in some of these areas, particularly inflation trends as we get further into the second and the third quarter,” Solomon said. “So we’ll have to watch that.”
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