FX/EM Market Moves & Commentary for 2016

2016 started off with a market meltdown led by China and oil prices that shook everyone’s confidence. Currency markets saw extreme moves and the interest rate picture remained highly uncertain. In the meantime, FX Volumes came into the New Year on record lows and all players were concerned about what 2016 would hold. During the months of January and February we endured the most anemic recruiting spell in our 17 year history. Conditions improved after the first quarter and the year had its share of volatility, but we also spent large stretches of time in limbo, driven by uncertainty over Brexit, then uncertainty ahead of the US election. However, once November 8th was behind us we experienced a palpable return of optimism and action in the market and we saw deals closing even late into the year. With fixed income profits returning, a positive outlook into 2017 for the macro trading environment and modulating regulation concerns, we look to see a brighter future for the participants in our markets.

Fin-tech, non-bank liquidity providers, agency business and electronic trading platforms picked up market talent along with second and third tier banks, but top-tier banks were not idle. Of note: Citi made several lateral hires into FX sales, and Morgan Stanley beefed up their trading desks. A trend that we saw in 2015 continued into 2016 with junior talent leaving the market to pursue opportunities outside of financial markets. Demand for bright associates and VP’s is high as a result.
Compensation season is underway, and the results are mixed. Bonuses seem to be up 5-10% on average but it is hard to generalize. Banks are targeting their high performers to receive the biggest increases, and investing in their junior talent as much as possible. Most people are reporting that their compensation was “fair” and “as expected”, the outlier being Deutsche Bank which announced that no one will receive bonuses this year and only “Key Personnel” will receive “retention bonuses” with 3-5 year vestings.

Research/Strategy Recruiting Report for 2016

Regarding research talent, we have witnessed a noticeable uptrend in placements for economists and strategists with Central Bank and Treasury experience. Given the central role monetary policy is playing in the financial markets, having skilled analysts on teams who can interpret and anticipate central bank actions is highly desirable. In broader terms, although consolidation and cost cutting within fixed income research teams were recurring themes from 2015 into 2016, the pace seems to be leveling out. With the exception to just a small handful of banks who have implemented hiring freezes e.g. Barclays and Deutsche Bank, teams are starting to rebuild.

Our client conversations lead us to believe demand for EM FX, Rates, and Credit strategists will remain strong into 2017. We have detected that outside of trade protectionist talk and currency depreciation accusations, market participants seem optimistic on emerging markets based on more stable commodity markets and a search for yield by European and Asian investors.

Download the full report: Artemis Consulting 2016 Moves and Commentary

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