In a world in which every commercial and investment bank has become a FDIC-backed hedge fund with no risk and unlimited leverage/return, it means that what used to be a November 30 fiscal year end for the financial industry has been rebased to a December 31 FYE. Except one bank still valiantly clinging to the title "largest independent investment bank" (and blasts CNBC with commercials claiming the same): the high-yield underwriting and trading midcap - Jefferies. And courtesy of its May 31 quarter end, Jefferies always provides an early glimpse into bond trading dynamics for the quarter. Said volumes (and thus revenues), represented by both total principal transactions, as well as just pure Fixed Income Sales and Trading, are shown on the chart below and are self-explanatory.
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If indeed Jefferies is once again the harbinger of what to expect from the broader investment bank industry's fixed income S&T results, it will be a very ugly quarter for banks, even without Ben Bernanke's words "out of place."