Zhi Tong Cai Jing·2026-01-13 00:20Core Viewpoint - The upcoming bond issuance by Wall Street's financial giants is expected to be larger than usual due to pressures from the Trump administration, potentially draining market liquidity and leading to a correction in the currently high-performing corporate bond and stock markets [1][2]. Group 1: Bond Issuance and Market Impact - Wall Street's six major financial institutions are anticipated to lead a significant bond issuance, with estimates of around $60 billion this week, driven by the need to respond to operational pressures from the Trump administration [1][2]. - Barclays predicts that approximately $35 billion of bond issuance will come from these six financial giants this month, with the total potentially rising to $55 billion by the end of the quarter [1]. - The large-scale bond issuance may create short-term "supply pressure," tightening financial conditions and impacting credit spreads and liquidity premiums in the bond market [2]. Group 2: Financial Performance and Earnings Season - The earnings season for major Wall Street banks is set to begin, with analysts expecting a strong performance that could validate the bullish outlook for the S&P 500 index, projected to reach 8,000 points in 2026 [3]. - The financial giants are expected to report robust earnings, driven by a recovery in investment banking and increased trading volumes, which have pushed their stock prices to historical highs [3]. Group 3: Regulatory Pressures and Credit Card Rates - President Trump has called for a cap on credit card interest rates at 10%, which could significantly impact the profitability of Wall Street's financial giants, particularly in their credit card businesses [4][5]. - The proposed cap is seen as a direct threat to the high-margin credit card business, which typically has interest rates around 21%, and could lead banks to tighten credit and reduce customer benefits [5][6]. Group 4: Future Outlook and Investment Opportunities - Analysts expect that the demand for bank credit assets will remain strong, offsetting any supply reductions due to regulatory changes, with a projected issuance of approximately $188 billion in high-rated bonds by the six major banks in 2026, a 7% increase from the previous year [7][8]. - The outlook for the banking sector is constructive, with expectations of a recovery in net interest income (NII) and stable growth in capital markets and wealth management fees, which could support a positive operating leverage [9][10].