Trading volumes encompassing the financial markets have fallen in the first two weeks this month as the ambiguity over the U.S. fiscal standoff drains the interest of the investors, betaking poor performance in the bank’s fourth quarter revenues.
A lot of asset managers who were in the dark due to the Federal Reserve’s surprise decision late last month to continue with its bond purchasing programmes were in their final three banking months of this year to make up for the losses they accrued earlier.
However, the most recent cliff-hanger stunt played by the US could result in a major default in the debt crisis which have already made investors very weary of their funds by setting them on the sidelines. As a consequence, the trading activity plummeted, with participants estimating volumes to have dropped to as much as 15 % in the currency market.
In Europe, stock market activity decreased by almost a fifth while volumes in the German government bond futures were poorly performing as compared with the previous weeks. Furthermore, it is very quite with the U.S. with regards to the debt ceiling problems which kept many institutional investors along the sidelines and not in the game.
Reaching the Limit
The foreign exchange trading volumes reached its maximum peak in the first half with massive easing programmes spearheaded in Japan led to a widespread selling of yen. The Federal Reserve scaled back its monetary stimulus in order to stimulate dollar buying.
It is true that the currency market is very much quieter during the first two weeks this month. Unless there is a solution made by the U.S., investors will continue to hold their ground and without any clear solution on the bank’s earnings from trading activity in terms of fixed income, currencies and commodities will suffer most of the effects.
Some regard the uncertainty of the volumes seem to drag and upset bank’s top line growth in the fourth quarter. There is no easy way from the reality that the third quarter was very difficult considering the outlook for the fourth quarter is still unclear. The most probable continuation of the political impasse is an imputable cause for top line revenues in view of the non-participation of investors until the markets recover in their favour.