Morgan Stanley fired a bunch of bond traders last year - now the business is taking off

Morgan Stanley may finally be seeing a turnaround in a hugely significant, but recently disastrous, business.

The firm just had its strongest quarter in fixed income sales and trading since the beginning of 2015, reporting revenues of $1.48 billion in the third-quarter, up from $583 million in the year-ago quarter.

Analysts were expecting revenues of $1.01 billion in the business.

That's a big quarter for Morgan Stanley's fixed income, or FICC, division, which was among the weakest on Wall Street in recent quarters. The firm cut 25% of its headcount in that business late last year.

The third quarter performance holds up well against results over the last couple of years, coming in a period that is usually one of the quietest of the year thanks to a summer trading lull. It's the best performance for the FICC business outside of the seasonally strong first quarter for several years.

Morgan Stanley's solid results match a broader trend taking place across the Street. JPMorgan, Citigroup, Bank of America Merrill Lynch and Goldman Sachs all reported strong FICC performance for the quarter.

FICC revenue across Wall Street banks fell 9% in 2015, and a number of firms cut headcount in addition to Morgan Stanley, including Deutsche Bank, Credit Suisse, and Goldman Sachs.

Morgan Stanley, like some of its competitors, attributed its stronger performance to improved market conditions for both its credit and its rates businesses. It's the first time in a while in which both macro products, like rates and currencies, and spread products, like corporate bonds and securitized products, have been strong at the same time.

Whether the strong performance across the Street is sustainable is another question. A number of factors aligned to help drive strong trading in the third quarter, including the aftermath of Britain's decision to leave the European Union and the subsequent wild swings in sterling; big currency moves in various emerging markets; a surge in debt issuance; and plenty of central-bank news.

But for Morgan Stanley, at least, it could be a sign that its restructuring in that business is starting to pay off.