David Solomon, CEO Goldman Sachs, talking on CNBC’s Squawk Field on the World Financial Discussion board in Davos, Switzerland on Jan. twenty second, 2026.
Oscar Molina | CNBC
When Goldman Sachs executives had been requested about disappointing leads to the agency’s fastened earnings division this week, they made it sound as if the buying and selling surroundings was merely not of their favor.
Mounted earnings income fell 10% within the first quarter, coming in $910 million beneath analysts’ expectations, in line with StreetAccount information. It was an unusually massive miss for one in every of Goldman’s flagship Wall Avenue companies.
“It was principally only a operate of the general surroundings making markets,” CFO Denis Coleman informed an analyst on Monday after the financial institution’s incomes report. “We stay actively engaged with purchasers, however our efficiency in charges and mortgages was comparatively decrease.”
However as almost all of Goldman’s rivals, together with JPMorgan Chase, Morgan Stanley and Citigroup, posted blockbuster outcomes for first-quarter fastened earnings within the days that adopted, one factor grew to become clear to Wall Avenue: Goldman Sachs’ vaunted fastened earnings merchants had underperformed.
JPMorgan noticed fastened earnings buying and selling income bounce 21% to $7.1 billion, the financial institution’s second-biggest haul ever. Morgan Stanley, the place fastened earnings is much less a precedence than equities, posted a 29% bounce within the bond enterprise. Citigroup noticed bond buying and selling income bounce 13% to $5.2 billion.
Since earlier than the 2008 monetary disaster, when Lloyd Blankfein led Goldman Sachs, the agency’s fastened earnings division had been the envy of Wall Avenue. Goldman was identified for its buying and selling prowess, a repute cast in intervals of dislocation when its desks generated outsized positive factors. The financial institution’s identification as a dealer’s agency — one anticipated to outperform in turbulent occasions — has endured within the decade-plus since.
That makes the first-quarter stumble notably notable.
“Evidently one thing went unsuitable at Goldman in fastened earnings,” mentioned veteran Wells Fargo analyst Mike Mayo, who referred to as the financial institution’s outcomes “worst-in-class.”
“I would think about that at Goldman, a fireplace is being lit beneath the merchants, managers and threat overseers in FICC after such an underperformance,” Mayo mentioned in an interview with CNBC, utilizing an acronym standing for fastened earnings, currencies and commodities, the formal title for that enterprise.
The prevailing idea is that Goldman was caught offsides on trades tied to rates of interest within the first quarter, in line with a number of market members who requested for anonymity to talk candidly.
That is due to the positioning that many Wall Avenue companies had in the beginning of this 12 months, when markets had been anticipating the Federal Reserve to chop rates of interest a minimum of twice in 2026, these individuals mentioned.
However after the worth of oil surged with the appearance of the Iran battle, roiling expectations for inflation, the markets started pricing these cuts out, with some buyers even bracing for the opportunity of price hikes this 12 months.
Mounted earnings was the only blemish on 1 / 4 wherein Goldman Sachs exceeded expectations handily, because of the agency’s equities merchants and funding bankers. Regardless of the earnings beat, the agency’s shares dropped as a lot as about 4% on Monday following the report.
Goldman Sachs did not instantly return a name looking for remark. However on Monday, CEO David Solomon sought to place the quarter’s efficiency into context:
“After I have a look at the size and the range of the enterprise, it is performing very, very properly,” Solomon mentioned in the course of the firm’s convention name. “Some quarters, it should be stronger right here, stronger there.”