A trader works on the floor at the New York Stock Exchange (NYSE) in New York City. REUTERS/Brendan McDermid/File Photo
WASHINGTON: With bonus season just a few months away, corporate bond traders are one of the few groups on Wall Street expected to see their overall compensation slip for this year.
Total pay for US workers in sales, trading and research tied to credit is forecast to drop an average of 6% for 2025 compared with the year before, according to surveys of market professionals by executive search firm Options Group.
Lower pay is expected after the early days of President Donald Trump’s trade war sparked a significant market downturn that many traders weren’t anticipating.
“There was a lot of turbulence during the tariff sell-offs, and people took some really big hits,” said Mike Karp, chief executive officer and co-founder of Options Group. “It didn’t matter that the market recovered.”
Overall pay for US traders in the investment-grade bond market is expected to fall by 6.6%, while compensation in the high-yield market is seen dropping by 8.6%, according to Options Group.
The forecasts reflect salaries paid in 2025, and bonuses for performance this year that are typically paid in early 2026.
For those underwriting bonds rather than trading them, it’s been a banner year.
In the United States, companies have issued more than US$1.73 trillion in investment-grade bonds in 2025, about a 10% rise from the same time last year, according to data compiled by Bloomberg.
The artificial intelligence boom has spurred tens of billions in issuance in the last few months, with Meta Inc receiving the largest order book in the history of the US high-grade corporate market for its supersized US$30bil bond sale in October.
Pay hikes are expected for US workers in just about every other asset class on Wall Street and are seen rising 6.7% overall.
Double-digit growth projected in investment banking, prime finance and equity derivatives.
As for the credit sector abroad, higher compensation is forecast everywhere else except Japan.
Wall Street had high hopes for the second Trump administration, betting that tax cuts and deregulation would boost the market.
But the president’s imposing tariffs on US trading partners probably weighed on some traders’ performance-based bonuses, which are a major component of Wall Street paychecks.
US commodity traders are also due for a decline in pay, of 1.4% on average, Options Group said.
But concerns have emerged about the health of structured markets.
The collapse of auto lender Tricolor Holdings in September raised questions about whether there could be more losses in asset-backed securities, especially those involving subprime borrowers.
“I think some of the firms have overextended themselves and gone further out on the risk curve than we think they should,” said Alan Johnson, founder and managing director of Johnson Associates.
“But so far these products have done well for their investors.”
Wall Street pay experts see market turbulence calming down in 2026, which could lead to stronger performance in some fixed income asset classes, yielding even better compensation.
“I think some of the winners will be products with less volatility,” Johnson said, singling out credit, mortgages and Treasuries. — Bloomberg
