Equities traders at major U.S. banks largely succeeded in navigating the most tumultuous markets in a generation as the pandemic triggered lockdowns in March and sent stocks swooning, only to later rebound. But that performance was soon overshadowed by fixed-income trading. Federal Reserve intervention in credit markets helped banks arrange a slew of fundraisings for desperate companies, giving those traders ample chances to buy and sell newly issued bonds.

In the second quarter, traders at three top fixed-income trading houses — JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs Group Inc. — generated about $10 billion in additional revenue. The windfall helped keep JPMorgan and Citigroup profitable despite massive loan-loss provisions.

Fixed-income traders may see their year-end bonuses jump 25% to 30%, according to Alan Johnson, founder of compensation consultant Johnson Associates. Yet those traders are likely to expect increases of 50% or more, he said.

“They’re going to be paid somewhat less than their results on an isolated basis,” Johnson said. “They will be disgruntled.”

Bloomberg / August 12, 2020