Goldman Rates Trading Desk Loss Behind Bank’s Earnings Setback

Goldman Sachs Group Inc.’s vast rates-trading business took a hit as interest rates surged in the wake of the US and Israel’s attacks on Iran, fueling the disappointing results that took investors by surprise this week and put pressure on shares.

Losses from the bank’s US nonlinear gamma rates desk, overseen by Arvind Giridhar, were one of several factors that contributed to the division missing analyst expectations by nearly $1 billion in the first quarter, according to people familiar with the matter. Gamma trading involves speculating on the speed at which an option’s exposure changes in response to movements in the underlying asset’s price.