Morning Coffee: Bank of America's fixed income traders have got some good excuses. How London bankers are boosting their bonuses

Last week, Brian Moynihan, the jokey CEO leading Bank of America, said things haven't been going as well at the bank in the third quarter as in the first and second quarters and that fixed income sales and trading revenues in particular have been erratic, if not down. At one point following his speech, BofA's share price fell 6%. 

This week, Bank of America's fixed income traders are fighting back. 

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Speaking to Bloomberg, 'people familiar with the matter' said that because BofA hasn't participated in some of this year's biggest AI debt-issuance deals, it's been harder for them to make the most of the subsequent bond trading activity. It was not their fault.

Whose fault was it then? Maybe Brian's? Maybe BofA's top debt capital markets bankers? Maybe someone like Mike Joo, who has a DCM background and who was co-running investment banking but is now off to Barclays instead? Maybe it was just fate. 

Either way, BofA is trying to make amends. Having missed out on most of this year's $400bn of debt issuance, BofA is now endeavouring to deploy $250bn of its own capital into "critical infrastructure," including AI infrastructure, between now and next year. 

Unfortunately, though, this may come too late to make much difference to this year's BofA fixed income trading bonuses. On the margins, it may even come too late to save some traders' jobs if BofA feels inclined to make any year-end cuts. This is presumably why unnamed people familiar have taken to Bloomberg to proclaim their lack of responsibility.

Bank of America's traders can also find solace in the fact that they are not alone in having a stodgy end to the year. Nomura's traders aren't doing great either. Nor are Goldman Sachs'. Goldman has played a key role in financing the AI boom, so its traders can't even use BofA traders' excuse. But BofA's unnamed insiders are pointing out that rates and municipal bond trading haven't been great this quarter, either.

Separately, bankers and traders in London have found a method of supplementing/investing bonus payments. Bloomberg reports that they have been buying up the January 2028 gilt. 

Purchases of this particular gilt have reportedly risen as much as 50% on retail investing platforms in the past two weeks. It's popular because tax is only paid on its tiny 0.125% coupon and - because it's a gilt - the rest is free from capital gains tax. As it moves towards par at maturity, buyers can benefit from the rise in price. And because it matures in 2028, geopolitical exposure is limited. Bloomberg spoke to "more than a dozen" people on trading floors who said they were buying it. BofA traders could hedge their failings this way, too. 

Meanwhile...

Suddenly, the big AI IPOs are on hold. Anthropic was expected to file for an IPO valuing it at $2tn this month. Open AI founder Sam Altman has said floating before next year would be, "ill-advised.” (FT) 

AI IPOs are out, oil tanker IPOs are in. Trafigura is floating its supertanker arm with the intention of raising $500m. (FT) 

Adnane Ait Omar left Deutsche Bank for Barclays last year. Now he's gone back to Deutsche Bank, where he will be the new global head of FX options platforms. (FX-Markets) 

Jamie Dimon is going to India. JPMorgan employs 60,000 people there, working in quant research, data science and cloud computing. (Bloomberg) 

Bank of England deputy governor Sarah Breeden thinks autonomous AI agents could cause a market meltdown and that kill switches are needed but that we're running out of time to implement them. (Bloomberg) 

Citi finished revamping its Canary Wharf tower and is moving in. (Financial News) 

Standard Chartered, Citigroup and other banks accidentally handled billions of dollars from a Kremlin-backed fintech company that tricked its way into the global financial system with forged documents. (FT)

KPMG is laying people off and doesn't appear to be offering high severance pay. You get half a week's pay for each year worked while under 22, one week's pay for each year worked from age 22 to 40, and 1.5 weeks' pay for each year worked from age 41. (The Register)

The new hot skills. Can you recognize patterns? Can you synthesize lots of disparate pieces of information? Can you figure out what perspectives are credible and which ones aren’t? (WSJ) 

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