Capital markets net revenues were down for all five U.S. global trading and universal banks (GTUBs) in the second quarter, both sequentially and year over year (YOY), following a generally strong start to the year, according to Fitch Ratings in its latest U.S. Capital Markets Quarterly.

Capital markets revenues for the U.S. GTUBs were down 4% YOY and 9% sequentially given low market volatility and subdued client flows in fixed income, currencies and commodities (FICC). Partially offsetting the weakness in FICC was continued strength in debt underwriting and advisory.

Within FICC, U.S. GTUBs generally cited weakness across all product areas, although Citigroup (Citi) highlighted currency trading weakness and Goldman Sachs (Goldman) experienced its weakest quarter in commodities trading since becoming a public company. This marks the second straight quarter in which Goldman's FICC results lagged its GTUB peers, a trend that could weigh further on Goldman's future results if hedge funds and other users of more complex trading strategies remain less active.

Despite the weaker quarter, FICC remained the primary driver of GTUBs' capital markets revenue, accounting for 42% of the total in 2Q17. "The banks with the largest FICC platforms will benefit from significant economies of scale particularly if client activity increases over the balance of the year," said Senior Director Justin Fuller. "That, however, is not likely to take place during the seasonally slower third quarter, with another drop in FICC net revenue expected before it potentially begins to rise should volatility increase."

Despite an 8% YOY drop in capital markets revenue, JPMorgan retained its leading market share with Citi leapfrogging Bank of America to land in second place in 2Q17. Morgan Stanley remained in fourth position though it boosted its market share thanks largely to stronger equity underwriting and equity market results.