Shares of JPMorgan Chase & Co. (NYSE:JPM) are down 2.6% today after announcing that second quarter trade volume would be down sharply from 2Q13 levels, bringing the investment bank’s trade revenues down with it. JPM warned investors to expect a 20% drop in trade revenue citing “a continued challenging environment and lower client activity levels,” reports Hugh Son for Bloomberg.

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Last month’s earnings miss was due to fixed income

The drop in activity may partially be a sign that investors are starting to look for better opportunities abroad after a healthy bull run in the US, but it’s also hard not to wonder if tapering is also playing a role. Even though the Federal Reserve was involved in fixed income markets, many people argue that QE has had the effect of inflating asset prices across the board. If QE caused markets to be more active than they would have if left alone, it seems reasonable that tapering would cause activity to slow. JPMorgan Chase & Co. (NYSE:JPM) first quarter profits fell 19%, and that was largely because of a 21% drop in the fixed-income unit, which also suggests a link to tapering.

While the news was unwelcome, it shouldn’t have been a surprise, as banking executives have been dropping hints about weak trade volumes for a while now.

“We can’t predict trading like we can’t predict interest rates,” said JPMorgan Chase & Co. (NYSE:JPM) CFO Marianne Lake in a conference call last month. “We’re not going to call a position on the market but we do hope that activity levels will pick back up.”

JPMorgan gets hit harder than other banks

By most other standards, JPMorgan Chase & Co. (NYSE:JPM) is still doing well. The bank reported a 9% increase in personal and business deposits, a 10% increase in credit card sales, and a 22% jump in business loan originations. It also held onto its position as the world’s largest investment banker with a 10% increase in AUM, but that exposure to trade volumes is exactly why JPMorgan Chase & Co. (NYSE:JPM) is being punished more severely by the lower volume than other banks. Even though it was JPM that made the filing, less trade will affect all the big banks but Citigroup Inc (NYSE:C) is down 1.31%, Bank of America Corp (NYSE:BAC) is down 1.28%, and Goldman Sachs Group Inc (NYSE:GS) is down 1.89%. The only bank to have been hit nearly as hard is Morgan Stanley (NYSE:MS), which has lost 2.35% in today’s trading.