Big US banks are poised to report Q2 earnings buoyed by a 26% projected surge in investment banking revenue, driven partly by the SpaceX IPO
JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs are set to report second-quarter 2026 earnings on Tuesday 14 July, with Morgan Stanley following on Wednesday. Analyst projections from KBW analyst Chris McGratty forecast investment banking revenue rising 26% year-on-year across the group, with trading revenue expected to climb 14%. The SpaceX IPO is cited as a principal driver of the fee surge, generating significant underwriting fees and so-called soft dollars (commission-equivalent payments from hedge funds directing order flow to rewarded banks) for Goldman Sachs and Morgan Stanley in particular on what was described as an oversubscribed transaction. Trading revenues are expected to approach or potentially exceed records set earlier in 2026, boosted by volatility in equity and fixed-income markets. Rising geopolitical risk from the US-Iran conflict pushed Brent crude up 5% and drove the two-year US Treasury yield to its highest level since February 2025, at 4.24%, with the ten-year at 4.59%. These yield moves reflect market speculation about Federal Reserve rate policy and signal the macro environment feeding into both trading and debt capital markets activity. For UK-nexus context, strong US bank earnings typically flow through to London operations given the integrated global platforms of these institutions, and elevated debt yields are directly relevant to sterling and European bond market conditions.
Why this matters
A 26% jump in investment banking revenues, if confirmed, would represent a meaningful rebound for deal-making fee pools and signal that capital markets activity, including IPOs and leveraged finance issuance, is recovering strongly. The SpaceX IPO is a single transaction capable of materially moving aggregate fee revenues across two or more banks, illustrating how landmark equity offerings concentrate revenue. Rising Treasury yields, if sustained, increase borrowing costs across debt capital markets and can compress deal volumes in rate-sensitive sectors such as leveraged buyouts (LBOs). Lawyers advising on UK and European equity and debt transactions will be watching US yield moves closely because they set the global risk-free rate benchmark against which all other credit spreads are priced.
On the Ground
A trainee in a capital markets seat supporting a live equity offering would be drafting or proofreading sections of the prospectus, coordinating verification notes (the process by which every factual statement in the document is sourced and confirmed), and preparing PDMR (person discharging managerial responsibilities) notification letters for company insiders. They might also assist with pricing supplement drafting once the book-building process concludes.
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