Bonus/Layoffs Watch '13: Bond Traders

The bonus is you get to keep your job.

With anemic bond trading revenue over the past few months hurting Wall Street profits, pay cuts and even layoffs are back on the table just when the future had started looking up for traders. Overall, bonuses on fixed-income, currency, and commodity trading desks will likely be down 10 percent to 15 percent, said Alan Johnson, head of the Wall Street compensation consulting firm Johnson Associates. It could be the third or fourth year in a row in which some Wall Street bond traders get $0 bonus checks, he added. Just two months ago Johnson had predicted bonus increases of 5 percent to 15 percent for fixed-income traders, but since then the Federal Reserve has decided not to start winding down its bond buying stimulus program, and gridlock has hobbled Washington. Both have alarmed investors who are unsure of where markets are heading, and are reluctant to make huge bets that could quickly turn against them.

If fixed-income trading volumes do not improve, banks may be forced to reduce headcount again, adding to the tens of thousands of jobs the industry has already shed since the financial crisis of 2008, recruiters, analysts and other industry sources said.

For U.S. bond traders, the Grinch may steal bonuses [Reuters]