Wall Street Bonuses Expected to Surge Amid Volatility and Dealmaking Revival

This analysis is based on the Reuters report [1] and Business Insider coverage [2] published on November 5, 2025, detailing Johnson Associates’ comprehensive compensation forecast for Wall Street professionals.

The bonus surge represents a significant reversal from recent trends, with equity sales and trading professionals projected to receive the largest increases of 15-25%, followed by investment bankers in M&A advisory and equity underwriting at 10-15% [1][2]. This compensation growth is directly tied to market dynamics including tariff-induced volatility that has boosted trading volumes and a revived dealmaking environment following a period of paralysis [1][2].

Current market data [0] shows major investment banks trading with modest daily movements: JPMorgan Chase (JPM) at $309.69 (+0.14%), Goldman Sachs (GS) at $788.72 (-0.27%), and Morgan Stanley (MS) at $164.16 (+0.09%). The relatively stable stock performance suggests the bonus news may have been largely anticipated by markets, though the underlying trading activities driving these bonuses continue to generate significant revenue.

The broader market context reveals strong performance over the past 30 days, with the NASDAQ Composite leading at +5.35%, followed by the S&P 500 at +2.87%, Dow Jones Industrial at +2.25%, and Russell 2000 at +1.20% [0]. This technology-heavy outperformance aligns with the equity trading boom highlighted in the Johnson Associates report [1][2].

: The bonus increases occur alongside a significant workforce reduction warning. Johnson Associates projects that financial firms may reduce their workforce by 10-20% over the next 3-5 years due to AI adoption [1][2]. This creates a complex scenario where remaining employees may see higher compensation but face increased job insecurity, particularly affecting entry-level and mid-level operational roles.

: The tariff policies implemented by President Trump have created market uncertainty that paradoxically benefits trading desks through increased volume and profitability [1][2]. This demonstrates how geopolitical policy can directly influence Wall Street compensation structures through market mechanics.

: A critical factor is the “large pipeline of deals that were paralyzed and now are getting released” [1]. This suggests the current surge may represent a temporary release of pent-up demand rather than a sustainable long-term trend, raising questions about future bonus levels once this pipeline clears.

: The analysis reveals varying vulnerability across business areas, with wealth management potentially more insulated from AI job losses compared to trading operations [2]. This suggests strategic considerations for both professionals and investors regarding sector resilience.

:

• Market Correction Risk
  : Markets are at “record valuations” [1], creating vulnerability to sudden reversals that could impact both trading revenues and dealmaking activity
• Policy Uncertainty
  : Ongoing trade tensions and potential policy changes could disrupt the current favorable environment for trading volumes
• Economic Slowdown
  : Alan Johnson cautioned that “The boom times may fade next year if the economy slows and credit and investment deteriorate” [1]

:

• AI Implementation Timeline
  : The pace of AI adoption could accelerate workforce reductions faster than the projected 3-5 year timeframe
• Compensation Structure Evolution
  : Banks must balance bonus increases with headcount reductions and AI investments, potentially creating a bifurcated market where highly-skilled professionals command premium compensation while overall employment declines
• Sustainability of Deal Pipeline
  : Monitoring whether current dealmaking revival represents temporary pent-up demand or sustainable trend is crucial for future outlook

:

• Short-term revenue growth in trading and investment banking segments
• Potential for increased efficiency and profitability through AI integration
• Opportunity for skilled professionals to command higher compensation in a more selective workforce

The Johnson Associates report projects Wall Street bonuses reaching their highest level since 2021, with equity traders leading at 15-25% increases and investment bankers following at 10-15% [1][2]. The surge is driven by tariff-induced market volatility and revived dealmaking activity, with markets at record valuations supporting both trading and M&A advisory work [1].

Major investment banks show mixed current performance, with JPMorgan Chase, Goldman Sachs, and Morgan Stanley demonstrating modest daily movements [0]. The broader market has shown strong gains over the past 30 days, particularly in technology-heavy indices like the NASDAQ [0].

A critical counterpoint is the projected 10-20% workforce reduction over 3-5 years due to AI adoption [1][2], with salary increases expected to slow to 3-3.5% as companies focus on cost control [1]. This creates a complex environment where remaining employees may see higher compensation but face increased job insecurity.

The analysis suggests the current bonus environment may not be sustainable beyond 2025, with potential economic slowdown and market correction risks on the horizon [1]. However, the integration of AI technology could lead to a more efficient, albeit smaller, workforce structure in the financial services sector.