Investment banks could face a tough second half as fixed-income trading and debt capital markets - their main source of revenues and profits - look set to shrink over the next six months.

The combination of uncertainty over an economic recovery, fears of a a possible bursting of the commodities bubble, the hangover from the European sovereign debt crisis, and concerns over inflation, rising interest rates and the withdrawal of the US Federal Reserve's massive liquidity injection programme - known as QE2 - make for a depressing outlook for investment banks, which last year generated 53% of their revenues from trading in fixed income, currencies and commodities. Senior bankers and analysts expect the slowdown to trigger a further wave of job cuts this year.