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Wall Street is reveling in a year of mega deals, a surging stock market, and a continuing AI frenzy.
The latest signal is a 2026 bonus boom expected to spill across most corners of finance, according to Johnson Associates.
The compensation consulting firm has hiked bonus projections by an average of 3 percentage points from its already bullish first quarter forecast. The firm tracks across 21 Wall Street job categories.
Four out of five Wall Street jobs are projected to see a bonus increase over last year. A clear theme: Big banks are expected to far outpace other institutions.
"Banks, at least for now, are leading the pack," said Alan Johnson, founder of the Wall Street consulting firm. The bonus differential is so evident that Johnson's firm is calling 2026 the "Year of the Bank."
The rise of Wall Street banks comes after they posted record first-half earnings. The giants took advantage of unusually active markets while US customers continued to spend and borrow.
Pay for stock traders and IPO bankers is estimated to jump as much as 30% over last year, followed by M&A bankers and senior bank executives, who are projected to see a bonus increase of 17.5%.
Broader corporate staff, including those working in operations, IT, finance, and human resources, are also expected to see a double-digit increase. Bond underwriters and fixed-income traders are on track for 7.5% bonus growth, while commercial and retail bankers are expected to get a 5% bump.
It will also be a good year for most asset and wealth managers, with the exception of pros working in private markets, where compensation is expected to vary drastically.
The pay dynamic signals a sharp unwinding of the past decade's trend, where private equity, credit, hedge funds, and other alternative businesses were the hottest places to be on Wall Street.
"The advantage that alternative asset management firms have had, at least for the time being, has fully gone away," Johnson said.
Excluding carried interest payments, bonuses in infrastructure investing and large private equity firms are trending up 7.5% and 5%, respectively.
Pros in real estate asset management, venture capital, and smaller PE shops are not projected to receive any pay increase in aggregate. Furthermore, the once-high-flying private credit industry is expected to see bonuses drop as much as 10%, according to Johnson Associates.
Mounting investor redemptions, fundraising pressure, and broader credit concerns are all piling onto the strain of many well-known private credit funds.
