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Morning Coffee: The bankers having the best start to the year for over a decade. Goldman Sachs clarifies its hiring intentions

The start of 2012 doesn't stick in the memory as a time of particular plenitude for people in banking. At a push, it might be recalled as one of several milestones in the Greek debt crisis or a year of frivolity for compliance professionals, who were still naming their prices after the financial crisis. But, early 2012 seems to have been something more: it was a great moment to work in European debt capital markets, and it's being repeated in 2023.

So far this year, European high grade debt issuance has reached $246bn, says the Financial Times, its highest level for 11 years. In the US, issuance are also booming: in December, investment grade debt issuance was just under $7bn; year to date in 2023 it's $182bn according to Refinitiv figures cited by the FT. 

The resurgence of investment grade issuance is a bright spot in a landscape that still looks a tepid for M&A and equity capital markets bankers. It's also a reminder to banks with itchy fingers that pulling the trigger on widespread layoffs could be a bad idea because conditions can dramatically improve in a matter of months. 

Enthusiasm for investment grade bonds reflects funds' pursuit of safe but high yields. EPFR, a fund flow tracker, says $19bn has been invested in the asset class since the start of the year, the highest ever at this point of the year. It's "euphoric" says UBS. Now that the Federal Reserve is seen as less likely to repeatedly increase interest rates and a deep recession is seen as less likely to provoke defaults, investors are jumping back into the market.  

In time, appetite for investment grade bonds could spread to high yield and drive higher credit trading revenues. This would be good news after a slow year for credit traders in 2022. Equally, however, there are fears that the investment grade boom could fizzle away if strong economic conditions and persistent inflation provoke more rate rises. Lotfi Karoui, Goldman's chief credit strategist, isn't optimistic: "The easy money has already been made," he declares.

Separately, while banks might be expected to huff on the embers of their hiring plans following a flicker of revenue resurgence, Goldman Sachs seems to be standing firm. Speaking at a conference last week, Bloomberg reports that Goldman CEO David Solomon avowed this year's frugality. We have a much tighter hiring plan in 2023,” said Solomon. “We’re very focused on expenses...”

Meanwhile...

Credit Suisse appointed Neil Hosie as sole head of its global equities team after his co-head Doug Crofton left to join Royal Bank of Canada in May. (Bloomberg) 

BaFin and the ECB aren't happy with Deutsche Bank's investigation into derivatives misselling. Deutsche didn't notice that shortcomings in its processes were being exploited by staff on other desks. Fewer than 12 people were sanctioned by the bank, mostly for a lack of oversight but some for exploiting flawed controls in bad faith. (Financial Times) 

Chien Chien Wong, CEO of Credit Suisse in Singapore, has resigned. (FiNews)

Many investors are “scarred” by a brutal 2022 and sense “career risk” in taking the wrong bet again now. (Financial Times) 

How to answer the question 'Why are you interested in this position?' Don't make it sound like you're expecting it to be a stepping stone. (The Cut) 

A beautiful voice can help you in life. Look at Boris Johnson. Deep and textured, raspy without crossing into sibilance. (Financial Times) 

Starting salaries for graduates with a bachelor’s degree in computer science are projected to drop by 4% to $72,843 this year. More employers want finance than computer science majors in 2023. (Bloomberg) 

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Have a confidential story, tip, or comment you’d like to share? Contact: sbutcher@efinancialcareers.com in the first instance. Whatsapp/Signal/Telegram also available (Telegram: @SarahButcher)

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AUTHORSarah Butcher Global Editor

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