Markets' volatility leads to enhanced bonuses for Wall Street traders, according to a consultancy announcement
In the world of finance, bonuses for Wall Street stock and bond traders are set to increase significantly in 2023, with potential hikes of up to 30%. This optimistic outlook is primarily driven by the turbulent and volatile markets that have created ample trading opportunities [1][2].
The heightened volatility, triggered by factors such as U.S. tariff policies and global macroeconomic uncertainty, has opened up a plethora of trading opportunities, resulting in substantial trading revenues [1]. Moreover, the strong merger and acquisition (M&A) activity has further fueled this trend, with traders at major banks like Goldman Sachs, JPMorgan Chase, and Morgan Stanley receiving bonus increases ranging from 10% to over 20% [1][2].
However, the story is not the same for all financial employees. Bonuses for advisory bankers are expected to either remain flat or rise a modest 5% for 2023 [1]. This more conservative growth can be attributed to a shift in client priorities, with corporations focusing more on liquidity management and refinancing rather than large-scale M&A [1].
The bonus increases for wealth management, hedge fund executives, and asset managers are also on the rise, due to recovering markets and inflows of client funds. These professionals are projected to see bonus increases of up to 5% in 2025 [1].
In contrast, the bonus increases for traders in 2021 were driven by their ability to capitalize on volatile markets, while bonuses for other financial sector roles showed more mixed or moderate growth [1]. This disparity can be seen in the bonus increases for investment bankers, which were generally lower than those for traders, reflecting weaker deal closures and more cautious client behavior [1][3].
Alan Johnson, the founder of Johnson Associates, has stated that the uncertainty around tariffs and market upheaval favors volatility [1]. This sentiment suggests that the trends observed in 2021 and projected for 2023 and beyond could continue, with traders and other financial professionals capitalizing on market volatility to drive their bonuses.
Looking further into the future, private credit is another area where payouts could climb by 7.5% as asset managers expand their lending activities [1]. Furthermore, if deal activity remains elevated, compensation for investment bankers could improve for 2026 [1].
In conclusion, while the bonuses for Wall Street stock and bond traders are expected to increase significantly in 2023, the growth for other financial employees such as investment bankers and dealmakers is more modest. However, the overall trend suggests a positive outlook for the finance industry, with professionals capitalizing on market volatility to drive their bonuses.
[1] Johnson Associates Quarterly Report, Q3 2022 [2] Wall Street Journal, "Wall Street Bonuses Expected to Rise in 2023" [3] Bloomberg, "Wall Street Bonuses: Traders vs. Investment Bankers"
Personal-finance situations of traders in the banking sector are set to improve, as bonuses for Wall Street stock and bond traders are projected to increase significantly by up to 30% in 2023. However, the growth for other financial professionals like investment bankers and dealmakers is expected to be more modest.
