By Matt Scuffham

NEW YORK (Reuters] – Wall Street banks anticipate that trading revenue will settle at a new normal somewhere between the pre-pandemic levels of two years ago and current levels, according to analysts and top executives.

Massive cash injections by the Federal Reserve into capital markets led to unparalleled liquidity and trading activity during the pandemic, as investors looked for opportunities to cash out. The fourth quarter saw a drop in trading revenue among Wall Street banks, as the market normalized and that the Fed reduced its asset purchases.

Goldman Sachs (NYSE :), JPMorgan, and other banks with large trading desks like JPMorgan Morgan Stanley Market volatility has been a huge benefit to traders (NYSE:), who have enjoyed their greatest period of trading since the 2007-09 financial crash.

The reality is that the market’s favorable backdrop won’t last forever.

David Solomon (Goldman Sachs chief executive) stated to analysts that no one could have foreseen the changes in the market environment over the past 2 years.

Solomon explained, “We do not see this as a sustainable environment.”

He stated that there was still “reasonable activity” at the bank in 2022. The business can thrive no matter what market conditions.

Executives at rival JPMorgan Chase & Co (NYSE:) struck a similar tone last Friday after the country’s largest bank posted earnings that disappointed.

According to Chief Financial Officer Jeremy Barnum, analysts, “Markets and banking have experienced some normalization in our central instance in 2022 in comparison to their record years of 2020 and 2021”

Barnum claimed that 2022 trading volumes would remain higher than they were in 2022.

“The start of a rate hike cycle could be quite beneficial to fixed income revenues,” he stated.

Analysts believe that overall trading activity will remain buoyant, although it may be lower than in the previous two years.

Devin Ryan is an analyst with JMP Securities. He’s part of Citizens Financial Group (NYSE:) Group. “The bar between 2020 and 2021 has been set very high,” Ryan said. “We are likely to see normalization. The industry is still trying to find out how that normalization will be.”

JPMorgan, Morgan Stanley and Goldman Sachs executive have expressed their optimism about securing market share gains during the pandemic.

Goldman has specialized in trading for its largest corporate clients.

Solomon said that “there’s still upside to us as a wallet share standpoint, looking at our broad client base.” We’ll grab more sustainable market share for any opportunity that the market offers.

Analysts believe that trading business prospects are much better than what people had expected.

Kush Goel is a senior analyst for Neuberger Berman, New York. He stated: “The outlook on trading looks more optimistic.” It’s not returning to 2019″