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: Jefferies projects ‘muted’ Q2 for investment banking but sees ‘green shoots’ in M&A

Jefferies analysts on Friday projected a continuation of “muted” trends in investment banking, although some encouraging signs are emerging in advising on corporate mergers and acquisitions. Equity capital markets activity “is the one bright spot” as analysts project results for the second quarter based on recent deal activity. All told, investment banking fees are down 22% from year-ago levels, with trading proxies for the second quarter pointing to softness in investment banking and sales & trading. Equity capital markets has shown “meaningful improvement” over the year-ago quarter, while advisory revenue has declined as an offset, but is “showing green shoots in deal and volumes,” Jefferies analysts said. Jefferies said recent guidance generally implies that sales and trading revenue will drop 20% to 30% given declining volatility. Fixed income, currency and commodity trading “is holding up better given the rates debate,” analysts said.

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