CHART OF THE DAY: Wall Street's Trading Desks Are Quiet These Days

Wall Street’s CEOs and CFOs are out preparing investors for what’s amounting to be a very ugly quarter for trading revenues. We’ve already heard from JPMorgan and Citigroup.

On Wednesday, Goldman Sachs’ Gary Cohn addressed the same problem at the Sanford C. Bernstein Strategic Decisions Conference.

“As we consider headwinds, volumes in a number of fixed income markets have been under significant pressure in 2014: FX volumes are down 45% versus 2013, mortgage-backed securities volumes are down over 20%, and corporate bond volumes are down almost 15%,” he said.

“Naturally, we’ve been hearing a number of questions about the driver of these declines, including: macro factors, like fiscal or monetary policy, regulation, or the low-growth global economy,” he continued. “We believe all play a role, but in our day-to-day business, the most significant factors are economic in nature.”

Cohn also addressed the fact that market volatility has been extremely low. Here’s Cohn: “”You can see the impact clearly in the data: the VIX is running almost 40% below its 10-year average; currency volatility is also roughly 40% below its 10-year average — in fact, the euro, in the last 2 months, has experienced its narrowest monthly trading range since its inception 15 years ago; interest rate volatility is running more than 35% below its 10-year average, with the US 10-year trading in a narrower band over the past 3 months than any time period over the past 35 years.”

In a nutshell, Cohn explained that low volatility “discourages hedging and delays opportunistic investing.”

And if clients aren’t trading, then Wall Street brokers and dealers can’t collect fees.

Cotd market volumesGoldman SachsVolumes from Federal Reserve, NYSE/Nasdaq, Arca, CME, and Bloomberg. Federal Reserve average weekly volumes for 2Q14 as of May 7, 2014 vs. full 2Q13 average. All other volumes are average daily for 2Q14 as of May 16, 2014, vs. full 2Q13 average. FX and Interest Rates indicate contract volume

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