Morgan Stanley

The Wall Street banks are reviving dormant formats to raise capital with a lot more duration than usual, playing into bets that the Federal Reserve is on the cusp of an easing cycle.

Morgan Stanley became the latest big Wall Street bank to tap the U.S. investment-grade market Wednesday after reporting earnings, as strong investor demand helps lenders borrow at lower yields than would have been possible at the start of the month.

The Wall Street investment bank saw its profits rebound in the second quarter as last year's decline in mergers continued to thaw. "The game will have to go on because there's just been so much activity that has been suppressed," said CEO Ted Pick.

The outgoing CEO, now executive chairman of the Wall Street firm, told a conference at the Federal Reserve Bank of New York this week that cultural values are a critical element in any prospective merger or acquisition deal.

In essence, it's a largely automated way to create so-called thematic indexes, which identify investments based on emerging trends, rather than on traditional industry sectors or company fundamentals.

Companies going public in the first quarter globally raised $27.8 billion, a 10% jump from the same period in 2023, according to data compiled by Bloomberg.

Morgan Stanley CEO Ted Pick downplayed the importance of government investigations into potential money laundering issues involving wealth management clients. "We've been focused on our client on-boarding and monitoring processes for a good while," he said.

In a rare sweep, fixed-income and equities traders at five of the largest U.S. banks beat estimates for the first quarter.

The SEC and the Treasury's Financial Crimes Enforcement Network have sought information on certain clients outside the U.S. who've raised red flags and the bank's policies to address it.

With the market predicting fewer interest rate cuts than previously anticipated, analysts expect some larger banks will increase their 2024 guidance for net interest income when they start reporting earnings on Friday.