Goldman Sachs CEO David Solomon speaks on CNBC’s Squawk Box at the World Economic Forum in Davos, Switzerland, on January 22, 2026.
Oscar Molina | CNBC
When Goldman Sachs When executives were asked this week about disappointing results in the company’s pension division, it sounded as if the trading environment was simply not in their favor.
Fixed income revenue fell 10% in the first quarter, $910 million below analysts’ expectations, according to StreetAccount data. It was an unusually big failure for one of Goldman’s flagship companies on Wall Street.
“It was basically just a function of the overall environment that shaped the markets,” CFO Denis Coleman told an analyst on Monday after the bank’s earnings report. “We continue to actively engage with our customers, but our performance on rates and mortgages has been comparatively weaker.”
But like almost all of Goldman’s rivals, including JPMorgan Chase, Morgan Stanley And CitigroupIn the days that followed released blockbuster first-quarter fixed-income results, one thing became clear to Wall Street: Goldman Sachs’ vaunted fixed-income traders had underperformed.
JPMorgan reported a 21% increase in fixed income trading revenue to $7.1 billion, the bank’s second-largest revenue ever. Morgan Stanley, where fixed income is less of a priority than stocks, saw its bond business rise 29%. Citigroup’s bond trading revenue rose 13% to $5.2 billion.
Even before the 2008 financial crisis, when Lloyd Blankfein ran Goldman Sachs, the firm’s bonds division was the envy of Wall Street. Goldman was known for its trading prowess, a reputation it earned during times of upheaval when its trades yielded outsized profits. The bank’s identity as a trading company – expected to outperform in turbulent times – has endured in the more than decade since.
That makes the stumble in the first quarter particularly notable.
“It appears that something has gone wrong at Goldman in the fixed income space,” said veteran Wells Fargo analyst Mike Mayo, who called the bank’s results “worst in class.”
“I would imagine that at Goldman, after such underperformance, a fire would be lit among the traders, managers and risk overseers in the FICC,” Mayo said in an interview with CNBC, using an acronym that stands for “Fixed Income, Currencies and Commodities,” the official name of that business.
The prevailing theory is that Goldman was sidelined in interest-related trades in the first quarter, according to several market participants who requested anonymity to speak candidly.
That’s because of the positioning of many Wall Street firms earlier this year, when markets expected the Federal Reserve to cut interest rates at least twice in 2026, these people said.
But as oil prices soared with the outbreak of the Iran War and inflation expectations fluctuated, markets began to price in those cuts and some investors even braced for the possibility of interest rate hikes this year.
Fixed income was the only blemish in a quarter in which Goldman Sachs significantly beat expectations thanks to the company’s stock traders and investment bankers. Despite the earnings decline, shares of the company fell as much as about 4% on Monday following the report.
Goldman Sachs declined to comment. But on Monday, CEO David Solomon tried to put the quarter’s performance in context:
“When I look at the size and diversity of the company, it’s doing very, very well,” Solomon said during the company’s conference call. “In some quarters it will be stronger here, stronger there.”
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