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Fed chair Jerome Powell. Photo: Federal Reserve via Getty Images

Tuesday's earnings reports showed how banks have reaped the rewards of the Federal Reserve's efforts to carpet bomb markets with liquidity since March.

What happened: JPMorgan's fixed-income trading revenue jumped 99% in the quarter, while fixed-income trading revenue climbed nearly 60% at Citi during the quarter.

  • Goldman Sachs and Morgan Stanley are expected to continue the bond trading bonanza when they report earnings later this week.
  • Wells Fargo's numbers lagged but it has a smaller investment bank and has trailed other banks since its fake account scandal in 2016.

Flashback: The Fed's entrance into the market with the announcement of QEinfinity and its plan to purchase hundreds of billions of dollars worth of corporate bonds led to an unprecedented surge in debt issuance.

  • "The Fed came in with its massive bazooka, addressed the liquidity concerns and it’s gone from a buyer’s market to seller’s market," Mike Collins, senior portfolio manager at Prudential's PGIM Fixed Income, told me in April.
  • "You couldn’t sell a bond before, today you can’t buy a bond."

Catch up quick: "Fees for underwriting blue-chip U.S. company bonds in the first half of the year essentially doubled to more than $7 billion," Bloomberg reported Monday.

  • U.S. companies already have issued more than $1 trillion of investment-grade bonds in just a few months, with the proceeds helping buoy the banks despite putting aside billions for future loan losses.

What to watch: Citi, JPMorgan and Wells Fargo set aside a combined $28 billion in Q2, FT notes, even more than they put aside in Q1 as the coronavirus pandemic first began wreaking havoc on markets.

Go deeper

Ina Fried, author of Login
Oct 22, 2020 - Technology

Intel shares drop sharply despite mostly solid earnings report

Photo: Omar Marques/SOPA Images/LightRocket via Getty Images

Shares of Intel fell as much 10% in after-hours trading Thursday — after the company posted quarterly revenue and earnings generally in line with expectations.

Why it matters: The chip giant is a bellwether for the PC industry, and small signs of weakness may be playing an outsize role in spooking investors.

4 hours ago - Health

Biden says it's "not the time to relax" after touring vaccination site

President Biden speaking after visiting a FEMA Covid-19 vaccination facility in Houston on Feb. 26. Photo: Mandel Ngan/AFP via Getty Images

President Biden said Friday that "it's not the time to relax" coronavirus mitigation efforts and warned that the number of cases and hospitalizations could rise again as new variants of the virus emerge.

Why it matters: Biden, who made the remarks after touring a vaccination site in Houston, echoed CDC director Rochelle Walensky, who said earlier on Friday that while the U.S. has seen a recent drop in cases and hospitalizations, "these declines follow the highest peak we have experienced in the pandemic."

Updated 5 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: Most COVID-19 survivors can weather risk of reinfection, study says — "Twindemic" averted as flu reports plummet amid coronavirus crisis
  2. Vaccine: FDA advisory panel endorses J&J COVID vaccine for emergency use — About 20% of U.S. adults have received first vaccine dose, White House says — New data reignites the debate over coronavirus vaccine strategy.
  3. Economy: What's really going on with the labor market.
  4. Local: All adult Minnesotans will likely be eligible for COVID-19 vaccine by summer — Another wealthy Florida community receives special access to COVID-19 vaccine.
  5. Sports: Poll weighs impact of athlete vaccination.