Zhi Tong Cai Jing·2026-01-13 00:44Core Viewpoint - The upcoming bond issuance by Wall Street's financial giants is expected to be significantly larger than in previous periods due to pressure from the Trump administration, which may lead to a liquidity drain from the market and potential corrections in the stock and corporate bond markets [1][2]. Group 1: Bond Market Dynamics - Wall Street's "Big Six" financial giants, including JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley, are anticipated to lead a busy investment-grade bond issuance week, with estimates around $60 billion [2]. - Barclays predicts that approximately $35 billion of bond issuance this month will come from these six financial giants, potentially rising to $55 billion by the end of the quarter [1][2]. - The issuance of high-rated bonds often creates short-term "supply pressure," which can tighten financial conditions and lead to a technical rise in credit spreads and liquidity premiums in the bond market [2]. Group 2: Impact of Regulatory Changes - Trump's proposal to cap credit card interest rates at 10% could significantly impact the profitability of the "Big Six," prompting them to issue bonds to cover potential losses from this regulatory pressure [4][5]. - The credit card business is a major profit center for these banks, with current rates around 21%, and a cap would compress their margins significantly [5][6]. - Analysts suggest that if the cap is implemented, banks may respond by tightening credit, reducing limits, or increasing fees, which could lead to a contraction in supply and a recovery of profitability pressure [6]. Group 3: Earnings Season and Market Expectations - The earnings season for major Wall Street banks is set to begin, with expectations that they will demonstrate strong performance, which is crucial for maintaining the bullish outlook for the S&P 500 index in 2026 [3][8]. - Analysts predict that the "Big Six" will collectively report profits of up to $157 billion in 2025, marking the second-highest annual profit in history [7]. - Goldman Sachs forecasts a constructive outlook for the banking sector, with expectations of continued growth in net interest income (NII) and resilience in capital markets and wealth management fees [9][10].