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Lehman was charged with the unenviable task of setting the tone for the a week of Q3 bank results. The bank’s numbers, heavily exposed at it is to US fixed income and MBS, is seen as the first real Wall Street damage report after the summer turmoil.

And on a first glance, the hit looks mercifully light. Wall Street reacted with relief marking Lehman and its US peers up sharply.

Within the bank’s fixed income capital markets business, Lehman wrote down the value of its leverage loan commitments and its positions in RMBS to the tune of a $700m hit to revenues. Losses were partially offset by hedging.

Nasty rumours were flying ahead of the numbers - with Chinese whispers that the bank’s eps numbers would disappoint. Thomsons Financial quoted one London-based trader passing along a scare-story that the figure would come in at $1.24 a share, below the hacked-back consensus of $1.48.

In the event, the bank posted earnings per share of $1.54 as net income fell 3 per cent to $887m from the third quarter of 2006. Capital markets inevitably had a rough ride, with revenues falling 14 per cent in the three months to August compared with a year earlier, with a 47 per cent drop in fixed income. Equity capital markets in contrast posted a 64 per cent increase in revenues during the quarter.

The bank also pointed to a strong quarter in investment banking and in investment management, where it posted record revenues.

When it comes to hiring, the bank also has yet to throw the brakes on - despite the collapse in buyouts and deal-making as a result of the credit squeeze. Lehman’s headcount crept up from the second quarter and on the year. Too soon to say if that is a trend that is set to continue.