David Solomon, CEO of Goldman Sachs, speaking on CNBC’s Squawk Box at the World Economic Forum in Davos, Switzerland, January 22, 2026.
Oscar Molina | CNBC
When Goldman Sachs When executives were asked this week about disappointing results from the company’s fixed income division, they gave the impression that the business environment simply wasn’t 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 large failure for one of Goldman’s flagship Wall Street businesses.
“It basically depends on the general environment that drives the markets,” Chief Financial Officer Denis Coleman told an analyst on Monday after the bank’s earnings report. “We remain actively engaged with our customers, but our performance on rates and mortgages has been relatively weak.”
But like almost all of Goldman’s rivals, including JPMorgan Chase, Morgan Stanley And Citi Groupreleased blockbuster first-quarter fixed-income results in the days that followed, one thing became clear to Wall Street: Goldman Sachs’ vaunted bond traders had underperformed.
JPMorgan saw its fixed-income trading revenue jump 21% to $7.1 billion, the bank’s second-largest haul ever. Morgan Stanley, where fixed income is less of a priority than stocks, saw a 29% increase in its bond business. Citigroup saw its bond trading revenue jump 13% to $5.2 billion.
Long before the 2008 financial crisis, when Lloyd Blankfein ran Goldman Sachs, the firm’s fixed income division was the envy of Wall Street. Goldman was known for its trading prowess, a reputation forged in periods of dislocation when its offices generated outsized gains. The bank’s identity as a trading business – expected to outperform in turbulent times – has endured over the past decade.
This makes the first quarter drop particularly notable.
“It appears something went 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 imagine at Goldman there is a fire lit among the traders, managers and risk supervisors at FICC after such underperformance,” Mayo said in an interview with CNBC, using an acronym meaning Fixed Income, Currencies and Commodities, the official name of that firm.
The prevailing theory is that Goldman was caught offside on interest rate-related trades in the first quarter, according to several market participants who requested anonymity to speak candidly.
That’s because of the positioning many Wall Street firms had earlier this year, when markets expected the Federal Reserve to cut interest rates at least twice in 2026, these sources said.
But after the price of oil soared with the advent of the Iran war, upending inflation expectations, markets began pricing in those cuts, with some investors even bracing for the possibility of a rate hike this year.
Fixed income was the only blemish in a quarter in which Goldman Sachs far beat expectations, thanks to the firm’s stock traders and investment bankers. Despite the drop in profits, the company’s shares fell about 4% on Monday after the report was released.
Goldman Sachs declined to comment. But on Monday, CEO David Solomon sought to put the quarter’s performance in context:
“When I look at the scale and diversity of the company, it’s performing very, very well,” Solomon said during the company’s conference call. “Some quarters it’s going to be louder here, louder there.”