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

Citi's Jane Fraser to become first female CEO of major bank

Photo: Ron Adar/SOPA Images/LightRocket via Getty Images

Citi CEO Michael Corbat announced Thursday he will retire after 37 years at the company, according to a company statement.

The state of play: The Citi board has chosen Jane Fraser, currently Citi’s president and CEO of global consumer banking, to succeed Corbat in February. She will be the first female CEO of a megabank, per CNBC.

Dion Rabouin, author of Markets
41 mins ago - Politics & Policy

Wall Street fears stimulus is doomed

Illustration: Sarah Grillo/Axios

The fight over a new Supreme Court justice will take Washington's partisan bickering to a new level and undermine any chance for needed coronavirus relief measures before November's election, Wall Street analysts say.

What we're hearing: "With the passing of Justice Ginsburg, the level of rhetorical heat has increased, if that seemed even possible," Greg Staples, head of fixed income for the Americas at DWS Group, tells Axios in an email.

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 7 a.m. ET: 31,346,086 — Total deaths: 965,294— Total recoveries: 21,518,790Map.
  2. U.S.: Total confirmed cases as of 3 a.m. ET: 6,858,130 — Total deaths: 199,890 — Total recoveries: 2,615,949 — Total tests: 95,841,281Map.
  3. Health: CDC says it mistakenly published guidance about COVID-19 spreading through air.
  4. Media: Conservative blogger who spread COVID-19 misinformation worked for Fauci's agency.
  5. Politics: House Democrats file legislation to fund government through Dec. 11.
  6. World: U.K. upgrades COVID alert level as Europe sees worrying rise in infections — "The Wake-Up Call" warns the West about the consequences of mishandling a pandemic.

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