Part of “reflation” was always going to be banks making more money in money. These days that is called FICC – Fixed Income, Currency, Commodities. There’s a bunch of activities included in that mix, but it’s mostly derivative trading books forming the backbone of math-as-money money. The better the revenue conditions in FICC, the more likely banks are going to want to do more of it, perhaps to the point of reversing what is just one quarter shy of a decade-long decay.

Having been stung almost universally by the “rising dollar” (conventional wisdom always says, or said, banks only make money in this space when volatility is higher; like many other money clichés, it has been proven false quarter after quarter), there was for many an expectation that “reflation” would even if temporarily turn things around. In FICC, Q2 2017 wasn’t very good at all.

Leading the way to the downside was Goldman Sachs (GS). Revenue in money dealing tumbled an alarming 40% year-over-year, following Q1 that wasn’t all that good to begin with. At just $1.16 billion, that’s down from $2 billion in Q4 2016 at the peak of the minor “reflation” frenzy, and the worst since the heaviest (volatility) of the “rising dollar” in Q4 2015 ($1.12 billion).

If I had to guess, Goldman was likely stung being caught not expecting the depth and persistence of anti-“reflation.” As a card carrying member of “interest rates have nowhere to go but up”, the bank very well might have been positioned for all that “rising rates” should mean in the textbook sense. The textbook hasn’t been correct for a very long time, which is one big reason why these parts of the monetary system just can’t get out of their own way.

Goldman Sachs was not alone in its downside, however. Practically all the big dealer banks with the exception of Morgan Stanley (MS) reported negative FICC comps. JP Morgan (JPM), once the unquestioned king of derivatives, saw its Q2 revenue drop almost 20% Y/Y. Bank of America’s (BAC) was down 14%, while the new king Citigroup (C) and its more aggressive purchase of “reflation” (at least according to the OCC reports for Q1 2017) resulted in “only” -6% revenue (making up for bad positions by volume?).