Goldman Sachs’ vaunted rates traders just found out how quickly a hot streak can turn cold when geopolitics barges onto the trading floor. Late in the first quarter, volatility tied to the war between the United States and Iran rippled through oil, currency and bond markets, forcing rapid repricings and leaving Goldman with losses in parts of its rates book.
The stumble in rate products weighed on the bank’s fixed-income, currencies and commodities (FICC) results, even as equities trading and dealmaking were running at record levels. Around New York’s financial district, the mixed quarter served as a sharp reminder that a few wild days can flip a strong narrative into mark-to-market pain. Traders and analysts say the episode underlines the trade-offs big banks accept when they run sizable macro positions alongside large client-facing franchises.
What Reuters reported
Two people familiar with the matter told Reuters that Goldman’s rates business booked losses on some positions near the end of the quarter as energy and foreign exchange markets spiked. In its first-quarter filing, Goldman reported FICC net revenues of $4.01 billion, roughly a 10% decline from a year earlier, even while the bank logged record equities revenue and hefty M&A fees, according to its Q1 release.
Peers and the broader picture
Not everyone on Wall Street was on the wrong side of the same storm. JPMorgan Chase reported FICC revenue of roughly $7.1 billion, up about 21% in its first-quarter results, a clear sign that the same market swings created big winners as well as losers.
Morgan Stanley and other large banks also leaned into the volatility, posting double-digit gains in trading. Taken together, the numbers show that the Iran shock carved an uneven path across Wall Street’s trading floors, rewarding some franchises while catching others flat-footed.
Analysts on what went wrong
Market analysts say Goldman’s relatively heavy macro exposure in rates left it more exposed when liquidity thinned out and prices snapped around. Wells Fargo analyst Mike Mayo told Reuters that “Goldman is quite heavy in macro in rates and there were some big changes in the month of March,” a setup that can turn apparent gains into losses over a very short window.
Goldman’s response and what management said
Inside Goldman, executives pushed back on any suggestion that the bank has a structural FICC problem. They framed the period as a “tale of two desks,” arguing that blockbuster equities and strong financing results helped offset weaker performance in some rate products.
Management emphasized confidence in the firm’s risk controls and stressed that softness was concentrated in rates and mortgages, while currencies, commodities and financing showed stronger contributions. Those talking points were reflected in the firm’s earnings transcript, which painted the quarter as tough but contained on the fixed-income side.
What to watch next
From here, investors are glued to oil prices, Treasury yields and central bank messaging to see whether the kind of March-style repricing that hurt some rate-makers is a one-off or a recurring feature. Goldman’s own research has warned that a prolonged energy shock could push inflation higher and keep interest rates elevated for longer, a backdrop that would keep rates desks busy but also raise the stakes on how big and how bold their positions can safely be.
