For the third year in a row, Wall Street’s bonus pool is set to explode! "War + volatility" unexpectedly becomes a money-printing machine.

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Market volatility continues to drive up trading demand, and after years of dormancy, M&A deals are finally making a comeback. Wall Street bonuses are set to rise for the third consecutive year.

According to the latest report from compensation consulting firm Johnson Associates, investment bankers who provide M&A advice to corporate clients are expected to see incentive compensation increase by 10% to 20% or even more year-over-year. Bankers assisting companies with equity financing are also likely to receive increases of more than 20%.

This optimistic outlook is based on a bountiful year for Wall Street in 2025. Last year, M&A activity rebounded significantly, boosted by the Trump administration's relaxation of regulations. This trend has continued into 2026, with several major banks just delivering their most profitable first quarter financial reports ever.

“This year is a year for banks,” said Alan Johnson, Managing Director of Johnson Associates. “It's like a horse race between trading and M&A.”

Market Volatility: From ‘Risk’ to ‘Dividend’

After Trump returned to the White House, his policy mix has continued to stir up the stock market, interest rates, and commodity markets. For Wall Street, this was supposed to be a risk to watch out for, but in the short term, it has turned into the most direct source of profits.

The report shows that equity traders are among the main winners in this round of bonus surges, with year-end bonuses expected to jump 10% to 15%. Fixed income traders are also performing well, with salary increases projected at 5% to 10%.

The logic of “creating wealth in turbulent times” is not complicated: institutional clients, to hedge uncertainties, are forced to increase trading frequency and position sizes, directly driving up trading revenue for major investment banks.

M&A Revival: The Long-Lost “Money Printing Machine” Restarts

2025 has proven to be a big year for M&A—with the Trump administration’s regulatory relaxation, M&A activity has notably recovered. This trend not only continues but also accelerated further in the first quarter of 2026. Several major banks have just reported their most profitable first quarter ever.

The return of deal-making means that the most lucrative adviser bonuses in investment banks are beginning to rebound. The report notes that bankers advising corporate clients on M&A may see incentive pay rise over 20% year-over-year, far above levels in past years.

Undercurrents beneath the Feast

However, Wall Street’s revelry is not without suspense.

“We are at war, which is a huge uncertainty,” Johnson said bluntly. The market currently believes the situation will not further deteriorate, but if conflicts such as those involving Iran escalate, all optimistic forecasts could be overturned.

Meanwhile, internal divisions within the industry are intensifying.

Private credit is bearing the brunt. With intensified competition and pressured returns, bonuses for professionals in this area are expected to remain flat or only increase by 5%. “The industry is about to reshuffle,” Johnson said, “the weak will shrink.”

The wealth management sector is relatively stable. Benefiting from steady net capital inflows and a talent war, bonuses are projected to increase by 5%. However, this area also walks a tightrope—should the stock market see a significant correction, performance and pay will quickly come under pressure.

After Record Highs, How Much Further?

According to estimates by New York State Comptroller Thomas DiNapoli, Wall Street’s bonus pool reached a record $49.2 billion in 2025, with an average bonus of $246,900—a 6% increase year-over-year. In 2026, this figure is expected to reach new heights.

“It’s still early,” Johnson said cautiously, “but things are once again unexpectedly optimistic, at least for now.”

With war, inflation, interest rates, and technological changes intertwining, just how long this prosperity can last remains the ultimate question every Wall Street participant must prepare for.

Risk Notification and DisclaimerThe market is risky, and investment should be cautious. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article suit their specific circumstances. Investments based on this are at their own risk. ```