Wondering which sorts of banking jobs are going to thrive under Donald J.? While it clearly won't be compliance (Trump's expected to start a regulatory bonfire), or cross-border M&A (who's going to want to do global deals in a world where trade barriers are back in vogue?), some species of bank employees are in for a good four years.
Macro and credit are both going to be great
To reiterate: Trump is excellent news for banks' fixed income trading desks. Barclays' analysts think his victory has started a whole new era, both for rates traders and for credit traders. "We believe that the debate for investors may move away from “could bond yields move by 10bps?” towards “could bond yields move by 100bps?”, they say in a note out this morning.
As Trump implements a fiscal stimulus package and reawakes inflation, rates are going to rise again. Volatility is back and banks can make money as the yield curve steepens.
Deutsche's researchers summarize the likely effect for markets in the chart below: Trump looks unequivocally good for rates desks and for FX desks (ie. macro), both of which should benefit from volatility. Investment grade (IG) credit markets should be "supported", which should in turn be good for debt capital markets bankers as primary issuance continues.
Barclays says banks with good exposure to fixed income sales and trading should win under Trump. In Europe, this means the likes of Deutsche and BNP Paribas (as well as Barclays itself). In the U.S., it means the likes of Goldman Sachs.
It's safe to work for Deutsche Bank again
Under Trump, things are also looking up for Deutsche. Barclays notes that Deutsche's U.S. operation should benefit from Trump's promise to repeal Dodd-Frank. Because Trump has promised swifter settlement of litigation cases, it also means that Deutsche's crippling DOJ fine is likely to be reduced. Banks with ongoing litigation overhangs are the winners from Trump, says Barclays. This might be why Deutsche's share price is up 13% since Trump got elected...
Photo credit: Sue Waters by Wall Street is licensed under CC BY 2.0.