Goldman Sachs The Markets “The Fed’s got your back”: What the rate cut means for investors
Sep 20, 2024
In this engaging discussion, Anshul Sehgal, the Head of US Interest Rate Products Trading at Goldman Sachs, dives into the recent 50 basis-point cut by the Federal Reserve. He examines its implications for the markets, including rising stocks and bond yields. The conversation also highlights the varying effects of fiscal policies on wage earners, the Fed's dual mandate concerning inflation and employment, and optimal investment strategies in the current landscape. Listeners can anticipate valuable insights into the Fed's future moves and economic outlook.
AI Snips
Chapters
Transcript
Episode notes
Fed's Mandate
- The Federal Reserve's mandate focuses on unemployment and inflation, not economic growth.
- This explains their aggressive 50 basis-point rate cut despite robust growth and high equity markets.
Market Reaction & Fed Put
- Market reaction to the Fed's rate cut was rational, with stocks and commodities rising.
- This is because the Fed's actions signal support for the economy, reminiscent of the post-2008 financial crisis playbook.
Labor Market Dynamics
- Increased immigration and post-pandemic re-entry to the workforce contributed to lower inflation but also increased job competition.
- This negatively impacts the bottom 50% of wage earners, which is the Fed's focus.