Goldman Sachs Gets the Volatility It Expected to See Last Year

(Bloomberg) -- Volatility has returned, just later than Goldman Sachs Group Inc. expected.

“We last year braced for the return of volatility and it didn’t come,” leaving the firm caught wrong-footed by subdued markets, Chief Executive Officer Lloyd Blankfein said Tuesday at a conference hosted by Credit Suisse Group AG. “The second part of the double whammy is that it affected our clients, and they became less active.”

Last year was a rough one for Goldman’s fixed-income, currency and commodities trading group. Net revenue from that business slumped 30 percent compared with a year earlier, largely due to challenges in the commodity business. Revenue from the equities unit also fell.

Blankfein said there are “some things that look different” in 2018 as several markets break out of long-held ranges. Activity may also pick up as central banks pull back on monetary easing, which he called a “blanket” on volatility.

Blankfein said he’d “love to extrapolate” from the start of 2018 to the rest of the year, but it’s too early to make predictions about revenue.

©2018 Bloomberg L.P.

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