Wall Street Bonuses Expected to Reach Four-Year High Amid Market Volatility and Deal Surge

This analysis is based on the Reuters report [1] published on November 5, 2025, which reported that Wall Street bonuses are expected to reach their highest levels in four years according to financial compensation consultancy Johnson Associates.

The projected bonus surge reflects a convergence of favorable market conditions. Market volatility, fueled by U.S. tariff policies introduced in 2025, has created profitable trading opportunities across various asset classes [1]. Simultaneously, the deal environment has shown significant recovery, with global M&A activity growing 10% in the first nine months of 2025 compared to the same period in 2024, reaching $1.938 trillion [2]. Technology sector deals have been particularly robust, with deal value reaching $104 billion in September 2025, up from $23 billion in the previous year [3].

Despite the positive bonus outlook, the Financial Services sector is currently underperforming with a 0.74% decline [0]. However, major investment banks have shown strong individual performance. JPMorgan Chase (JPM) has delivered impressive returns with YTD performance of +28.85% and 1-year gains of +39.62% [0]. Goldman Sachs (GS) has performed even better with YTD gains of +37.54% and 1-year performance of +50.07% [0], positioning its Global Markets segment (65.3% of revenue) particularly well to benefit from trading volatility [0]. Morgan Stanley (MS) also shows strong 1-year performance gains [0].

Johnson Associates provides detailed bonus projections across different financial services segments [1]:

• Equity Sales & Trading
  : Leading with 15-25% increases
• Investment Banking
  : Advisory and equity underwriting expected to see 10-15% increases
• Wealth Management
  : Projected 8-10% increases
• Asset Management
  : Expected 7-12% increases
• Fixed Income Sales & Trading
  : Moderate 5-15% increases
• Retail & Commercial Banking
  : More modest flat to 5% increases

The M&A boom shows significant regional variation. More than 60% of 2025 M&A activity involved North American targets, with deal values jumping by over 25% to $1.2 trillion [2]. In contrast, European M&A volumes declined 5% to $375 billion [2], creating geographic performance differentials that could affect banks with varying regional exposures.

A critical long-term factor is the projected 20% workforce reduction in financial firms over the next five years, largely driven by artificial intelligence adoption [1]. This structural change represents a fundamental shift in the industry’s employment model and could significantly impact long-term compensation structures and career progression patterns.

While major indices have shown strength over the past 30 days (NASDAQ +3.06%, S&P 500 +1.53%, Dow Jones +1.54%) [0], the Russell 2000 declined 1.30% [0], indicating divergence between large-cap and small-cap performance that could affect different banking segments variably.

: Johnson Associates explicitly warned that “the boom times may fade next year if the economy slows and credit and investment deteriorate” [1]. The current bonus surge appears cyclical rather than structural, with historical patterns suggesting bonus cycles typically follow economic cycles.

: Ongoing concerns about U.S. tariff policies continue to create market uncertainty [2][3]. While current volatility benefits trading desks, prolonged trade tensions could reduce cross-border M&A activity and impact corporate profitability.

: The AI-driven workforce reduction represents both operational efficiency gains and potential social challenges, potentially reducing career opportunities for junior finance professionals and increasing pressure on remaining staff [1].

: Current market conditions create significant opportunities for trading desks, particularly in equity sales and trading where 15-25% bonus increases are projected [1].

: The surge in technology deals from $23 billion to $104 billion year-over-year [3] presents substantial advisory opportunities for investment bankers with technology expertise.

: Banks with strong North American exposure are well-positioned to capitalize on the regional M&A surge, while those with European exposure may need to adjust strategies [2].

The bonus projections reflect strong current market conditions driven by volatility and deal activity recovery. Equity sales and trading professionals are positioned for the largest compensation increases (15-25%), followed by investment banking professionals (10-15%) [1]. Major banks like Goldman Sachs and JPMorgan Chase have demonstrated strong performance that supports these bonus increases [0]. However, the sustainability of these conditions remains questionable given economic cycle risks and the potential for 2026 slowdown [1]. The industry is also undergoing significant structural changes with AI-driven workforce reductions that could alter the long-term compensation landscape [1]. Geographic disparities in deal activity, with North America outperforming Europe [2], create varying opportunities for different banking institutions. Decision-makers should monitor leading economic indicators, AI adoption metrics, and trade policy developments to assess the durability of current favorable conditions.