Fed Policy Uncertainty & Macro Headwinds
Key Questions
Why has Goldman Sachs delayed its Fed rate-cut forecast?
Strong US jobs data has prompted Goldman Sachs to push its rate-cut forecast to 2027, reflecting a more hawkish outlook amid internal Fed divisions.
What factors are influencing Treasury markets over inflation?
Real yields are driving Treasury movements rather than inflation, while federal debt stands at 101% of GDP with multiple scenarios outlined by J.P. Morgan.
How is ECB policy affecting EUR/USD?
The ECB is hiking rates into weakening growth, signaling stagflation risks, with a target of 1.1400 for EUR/USD amid high mortgage rates from fiscal deficits.
Strong jobs data delays Fed cuts; internal divisions (Bowman, Barr, Hammack) signal hawkish pause. Real yields driving Treasury market, not inflation. Federal debt at 101% GDP with five scenarios from J.P. Morgan. ECB hiking into weakening growth (stagflation signal, EUR/USD target 1.1400). Mortgage rates remain high despite Fed cuts due to fiscal deficits and MBS prepayment risk. Waller's 2021 speech warns against dismissing inflation outliers.