2025-10-14 16:00

JPMorgan's equities, fixed income trading desks shine Investment banking rebound powers fee growth CEO signals US economy remains resilient Oct 14 (Reuters) - JPMorgan Chase (JPM.N) , opens new tab raised its full-year forecast for net interest income on Tuesday, after strong performance in its trading and investment banking businesses helped it beat expectations for third-quarter profit. Economic resilience despite tariff war risks and hopes of U.S. interest rate cuts have prompted companies to strike big deals and consider stock offerings, lifting investment banking business across Wall Street. Dealmakers expect an even stronger 2026. Sign up here. "While there have been some signs of a softening, particularly in job growth, the U.S. economy generally remained resilient," CEO Jamie Dimon said in a statement. "However, there continues to be a heightened degree of uncertainty stemming from complex geopolitical conditions, tariffs and trade uncertainty, elevated asset prices and the risk of sticky inflation," he added. Overall, the U.S. consumer remains healthy, and the bank was not witnessing signs of stress, Chief Financial Officer Jeremy Barnum said. "Consumers and small businesses remain resilient based on our data, and while we are closely watching the potentially softening labor market, our credit metrics, including early stage delinquencies, remain stable and slightly better than expected," Barnum told reporters. JPMorgan shares pared early losses and were last down 1.7% in late-morning trading. The stock was up 28% year-to-date as of Monday. "It was another classic, strong quarter from the bank, and the expectation is set high. Sometimes we see this with JPMorgan stock that, despite everything, there's not quite enough to drive a positive earnings day stock reaction," said Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management. Mac Sykes, portfolio manager at Gabelli Funds, said the bank's suggestion, in response to an analyst's question, that expenses could rise about 4% next year, might be weighing on the stock. MARKETS REVENUE JUMPS The bank's traders capitalized on portfolio repositioning by their clients as equity markets hit record levels during the quarter. Revenue from the markets division, which includes both equities and fixed-income trading, rose 25% to $8.9 billion to a third-quarter record, far surpassing an earlier estimate. "The quarter showcased the strength of JPMorgan's diversified business model, with all major segments contributing to growth. We think this will lead the momentum for the rest of 2025 and into 2026," Kenneth Leon, director of equity research at CFRA Research, wrote in a note. JPMorgan also noted losses related to "borrower-related irregularities" in its commercial and investment bank, as well as a loss related to a single client in its asset and wealth management unit. The bank said it has exposure to bankrupt auto dealer Tricolor, and it took a $170 million loss in the third quarter related to the situation. Referring to Tricolor, Dimon said this was "not our finest moment," and said the bank was looking at all risk and control frameworks. He also warned that similar situations with other borrowers could arise. "When you see one cockroach, there are probably more." NII BOOST Large banks such as JPMorgan and Bank of America (BAC.N) , opens new tab can check the pulse of the U.S. economy by offering insights into consumer spending, borrowing, and business activity. Net interest income, the difference between what banks earn on loans and pay on deposits, continues to prop up industry earnings. JPMorgan revised its NII forecast for the year higher to roughly $95.8 billion, compared with an earlier estimate of $95.5 billion. It had also raised its forecast in July. "As a traditional bank, NII is a core earnings engine," said Brian Mulberry, senior client portfolio manager at Zacks Investment Management, which holds the bank's shares. "The fact that JPMorgan has raised its NII guidance indicates confidence in its interest-earning asset performance." It expects interest income, excluding markets, of $95 billion in 2026, driven by balance sheet growth and partially offset by the impact of lower rates. WALL STREET OPERATIONS SHINE Corporate dealmaking has picked up this year as companies take advantage of a booming stock market. Investment banking fees at JPMorgan rose 16% in the third quarter. Trading revenue also soared at a time when economic uncertainty remains. "There is a lot of stuff in the queue (on initial public offerings) and ready to go, and now conditions are much more favorable in terms of equity market valuations," Barnum said, adding that merger and acquisition activity has also risen. "It was the busiest summer we have had in a long time in terms of announced M&A activity, and we're seeing that play through," he added. JPMorgan has collected the most investment banking fees among its rivals this year, according to analytics firm Dealogic. Revenue from equities business jumped 33% to $3.3 billion in the third quarter, while that from fixed income surged 21% to $5.6 billion, largely driven by higher revenue in rates, credit and the securitized products. Uncertainty about interest rates and the U.S. government shutdown could reignite market volatility, benefiting Wall Street trading. JPMorgan reported a profit of $5.07 per share for the latest quarter, comfortably beating analysts' estimates of $4.84 per share. Rival Wells Fargo (WFC.N) , opens new tab and Goldman Sachs (GS.N) , opens new tab also beat Wall Street estimates for third-quarter profit on Tuesday. https://www.reuters.com/business/finance/jpmorgan-profit-rises-investment-banking-boom-trading-strength-2025-10-14/

2025-10-14 15:43

IMF highlights elevated risks in global financial stability report Nonbank financial sector growth could impact bank capital in downturn Central banks urged to remain cautious on monetary easing amid tariff risks WASHINGTON, Oct 14 (Reuters) - Global markets are too comfortable with risks, including trade wars, geopolitical tensions and yawning government deficits, which, combined with already overpriced assets, increase the chance of a "disorderly" market correction, the International Monetary Fund said on Tuesday. Underscoring the IMF's warning, U.S. President Donald Trump's revived threats on Friday to hike tariffs on China stoked investor fears of a major asset price correction. The comments sparked a sell-off in U.S. stocks and sent bitcoin tumbling. Sign up here. Despite this recent volatility, markets have mostly been resilient since April, when Trump unleashed his trade war, underpinned by expectations of monetary easing in most major advanced economies. However, this market optimism masks the potential damage from tariffs and high government debt. The IMF warned that the close ties between banks and less-regulated financial firms could amplify these risks. "Beneath the calm surface, the ground is shifting in several parts of the financial system, giving rise to vulnerabilities," the global lender wrote in its semi-annual Global Financial Stability Report. "Valuation models indicate that risk asset prices are well above fundamentals, increasing the probability of disorderly corrections when adverse shocks occur," it wrote. Despite some negative economic data, equity and corporate credit valuations are "fairly stretched" as enthusiasm over AI mega-cap stocks drives historic stock market concentration. That creates the risk of a "sudden, sharp correction" if expected returns fail to justify lofty valuations, the IMF said. ASSET PRICES SIGNAL DANGEROUS BUBBLE TERRITORY Analysis of sovereign bond markets also highlights growing pressure from widening fiscal deficits on market functioning. While bond markets have been mostly stable so far, abrupt jumps in yields could strain bank balance sheets and pressure open-ended funds like mutual funds, the IMF said. U.S. bond markets sold off last month as concerns about global fiscal health escalated, although the pain was quickly reversed and bonds rallied on weak economic data. Speaking to reporters in Washington on Tuesday, Tobias Adrian, director of the IMF's monetary and capital markets department, warned that term premium - the risk premium investors demand for holding longer-term bonds rather than rolling over short-term debt - is now at levels not seen since before 2009. It may continue to rise as supply increases, he said. Last week, the IMF also warned that banks have significant dollar exposure in their balance sheets, making them vulnerable to potential funding shocks. The dollar is down nearly 9% this year against a basket of currencies on expectations of further U.S. Federal Reserve monetary easing and Trump's trade policies. "While financial conditions are easy, the macro financial risks remain," said Adrian. The IMF said central banks should remain alert to tariff-driven inflation risks and take a cautious stance on monetary easing to minimize further valuation spikes in riskier assets. Central bank independence is "critical" for anchoring market expectations and allowing those institutions to fulfill their mandates, it added, without referring to a specific institution. Trump's attacks on Fed policymakers are emerging as the biggest threat to central bank independence in decades, sparking worries among central bankers worldwide, Reuters reported in August. The IMF also called for "urgent fiscal adjustments" to curb deficits and ensure resilient bond markets. NONBANK FINANCIAL FIRMS CREATE CONTAGION RISK Heightened interconnectedness between banks and the more lightly regulated nonbank sector would amplify any shocks stemming from sectors such as private credit or cryptocurrencies, the IMF said. The group for years warned about patchy nonbank oversight but cautioned on Tuesday that the sector - which includes insurers, pension funds and hedge funds - continues to grow and now holds roughly half of the world's financial assets. In the U.S. and Europe, many banks have nonbank exposures that exceed their high-quality loss-absorbing capital, the IMF said. Roughly 10% of U.S. banks and 30% of European banks would experience a substantial hit to their capital if nonbanks drew down all their credit lines, according to an IMF analysis. "Vulnerabilities in the nonbank sector are interconnected," the IMF wrote. "They can quickly transmit to the core banking system, amplifying shocks and complicating crisis management." The global lender urged policymakers to adopt a more comprehensive approach to assessing these less visible risks, particularly around interactions between banks and nonbanks. Echoing European policymakers, the IMF also called on governments to adopt a comprehensive policy response to crypto assets, including stablecoins, the adoption of which could weaken a government's control over its own currency and disrupt the traditional banking system. https://www.reuters.com/business/finance/imf-warns-rising-odds-disorderly-global-market-correction-2025-10-14/

2025-10-14 15:31

FRANKFURT, Oct 14 (Reuters) - European Central Bank President Christine Lagarde said on Tuesday she didn't see any sign of disorder in the euro zone bond market despite an ongoing budget crisis in France. "I said previously that we are monitoring financial markets, that we're looking at spreads..., but there's nothing disorderly at the moment," Lagarde told CNBC. "If there were..., we have tools, they have criteria, they have conditions." Sign up here. https://www.reuters.com/business/finance/ecbs-lagarde-sees-no-disorder-bonds-despite-french-crisis-2025-10-14/

2025-10-14 15:21

LONDON, Oct 14 (Reuters) - French stocks, bond prices and the euro rallied on Tuesday, after Prime Minister Sebastien Lecornu suspended a landmark 2023 pension reform until after the 2027 presidential election, bowing to pressure from leftist lawmakers. French government borrowing costs extended the day's decline, leaving the yield on the benchmark 10-year OAT down 6.2 basis points at 3.404%, from around 3.42% earlier, at its lowest since early September. Sign up here. This left the premium to German Bund yields , a measure of demand for French debt, at 80 basis points, down from last week's high of 88 bps, but still elevated. The euro flipped into modestly positive territory, while stocks in Paris, led by a rally in banking stocks, cut some losses, to trade down 0.2% on the day, compared with a 0.4% loss in the STOXX 600 (.STOXX) , opens new tab. COMMENTS: JUAN PEREZ, DIRECTOR OF TRADING, MONEX USA, WASHINGTON: "I think anything that will bring some relief to the back-and-forth within the French parliament is an absolute win. Pension is very complicated and a major point of discord amongst policymakers as it represents the most important elements of the welfare state. If other items take priority and they can agree on a budget while agreeing to some tax increases, the markets will certainly see it as a positive step after the political crisis in the EU's second largest economy brought the value of euro by 2.5% in the last four weeks." EMMANUEL CAU, HEAD OF EUROPEAN EQUITY STRATEGY, BARCLAYS, LONDON: "For France there’s definitely better sentiment.. given the fact that we avoided the worst case scenario meaning dissolution. But we’re not seeing excitement, there is caution regarding this segment ... France is the only major EU country seeing massive outflows. On top of that, when you look at the OAT spread, it is still trading around 80 meaning it is embedding some French political risk premia, it has been opening since the June (2024) snap elections. It’s definitely not an area where people are complacent, and this will continue. When you look at domestic names in France like banks or a couple of industrial names that have been doing amazingly well this year ...(they) have been decoupling a lot with French political risk . JANE FOLEY, HEAD OF FX STRATEGY, RABOBANK, LONDON: "There's not the same danger with the euro that international investors might walk away and sell as there is with say the pound which depends on the kindness of strangers. We saw the euro react a little last week to the French news but that was really a case of the market being very long euro and short dollars and the repositioning was going to happen on really any news trigger." https://www.reuters.com/business/view-french-markets-gain-slightly-pension-reform-delay-2025-10-14/

2025-10-14 14:21

WASHINGTON, Oct 14 (Reuters) - The Israel-Hamas peace deal that halts two years of armed conflict in Gaza presents an opportunity for a lasting economic recovery in the region, the International Monetary Fund's deputy chief economist said on Tuesday. Petya Koeva-Brooks said the IMF stands ready to cooperate with the international community on the recovery of Gaza and regional economies that have been deeply affected by the conflict, including Egypt and Jordan. She said Egypt's outlook had already been upgraded to 4.3% real GDP growth in 2025 and 4.5% in 2026 because of a recovery in tourism and a boost to the non-oil manufacturing sector. Sign up here. These sectors have offset declines in Egypt's conflict-hit Suez Canal revenues, but she said Suez and mining activities were expected to recover in 2026. https://www.reuters.com/world/middle-east/imf-says-gaza-peace-deal-creates-opportunity-lasting-economic-recovery-2025-10-14/

2025-10-14 13:53

WASHINGTON, Oct 14 (Reuters) - The latest trade tensions between the United States and China pose a downside risk for the global economy that is not reflected in the International Monetary Fund's latest outlook, chief economist Pierre-Olivier Gourinchas said on Tuesday. Gourinchas told reporters that the U.S. tariff shock was further dimming already weak growth prospects, with uncertainty over tariff policies weighing on investment. Sign up here. https://www.reuters.com/world/latest-us-china-trade-tensions-add-economic-risk-imfs-gourinchas-says-2025-10-14/