Investment banks are bracing themselves for a tough second half of the year as the fixed-income boom comes to an end, but they are preparing for a soft landing.

Senior bankers and analysts accept the drop-off in debt market issuance in the past few months, coupled with extreme volatility in the bond markets in July, will sharply reduce revenues from fixed income in the second half of the year. They are concerned that the nascent recovery in equity markets and mergers and acquisitions activity will be insufficient to bridge the gap in their revenues.