What to watch as the biggest US banks report earningsWhat to watch as the biggest US banks report earnings

Financials ended 2025 on a tear, perhaps getting a bit over their skis in pricing in a global economic reacceleration**** thanks to continued fiscal stimulus and the waning impact of tariffs. Every morning this week, we’ll be inundated with news about how America’s banks — from the gigantic, systemically important ones to the small regional players — performed in the first quarter of the year. 

Goldman Sachs kicked off the week and reported lower-than-expected sales and trading revenue for its fixed income, currencies, and commodities division. Oof. The stock was down as much as 4.6% in early trading before paring losses to 1.9% by the close.

Trading results may get the early headlines, but here’s what really matters to the market’s mood:

• Management’s color on the economic outlook and whether they’re seeing impacts on consumers or businesses from higher fuel prices. 
• Then there’s the issue of private credit and banks’ exposure to it. 
• Private credit funds have been facing investor outflows in light of their elevated exposure to software companies. Anthropic has blown a Claude Cowork-shaped hole in the rosy assumptions about recurring revenue streams generated by software firms. 
• In turn, the pricing of many of these funds indicates the market doesn’t believe the loans are worth what these asset managers say they’re worth.
• …and banks are lenders to private credit funds. JPMorgan recently curbed its exposure to the space while marking down some of these loans, which aren’t publicly traded.
• Last month, when Deutsche Bankrevealed a $30 billion exposure to private credit**** in its annual report, the stock suffered its biggest one-day loss since April 2025.

But maybe the most important reason private credit will be a huge part of the narrative this week is because the media is obsessed with it. Peep this chart**** of monthly stories about the asset class versus the price of an ETF of business development corporations (BDCs) — the providers of private credit.

The Takeaway

So far, private credit’s problems have stayed mainly, well, private. Or, at the very least, it’s currently more a story of technological disruption than nascent financial contagion. Besides a few headline-grabbing days, that’s not what we’ve seen. The three-month correlation between bank ETFs and an ETF that holds BDCs is not particularly strong — as charted here. Quite simply, if the travails of private credit are A Big Deal, then it should be a driving force for not only the BDCs that extend this financing, but the banking industry as a whole.