Goldman Sachs:
According to Goldman Sachs inflation may not be cooling as quickly as some investors may think, says Anshul Sehgal, head of US Interest Rate Products Trading in Goldman Sachs Global Banking & Markets, on this week’s episode of The Markets podcast.
Core CPI inflation in May came in well below expectations at 0.16% month-over-month, the slowest pace since August 2021. But according to Sehgal, there were elements of the report that weren’t as promising as it appeared on the surface. Some sectors that aren’t as sensitive to interest rates, like healthcare and medical services, “remain sticky” when it comes to inflation, he says.
In an interview with Ashish Shah, global co-head and CIO of Public Investing with Goldman Sachs Asset Management, Sehgal notes that financial markets may have overreacted to the data. “One print does not make a trend,” Sehgal says.
Also this week, the Federal Reserve indicated it would likely only cut its policy rate once this year. The US central bank had previously signaled that three rate cuts were likely.
While the shift may have been surprising, especially coming on the back of tamer inflation data, Sehgal points out that the US job market “remains incredibly strong,” which could eventually drive up wages and reignite higher inflation. “It makes sense for the Fed to be cautious,” he says. If inflation stays low in the coming months, the central bank can always change its plan and move to two policy rate cuts, Sehgal adds
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Nice sir keep it up