Goldman Sachs now forecasts that the Fed will raise interest rates four times this year. The central bank might start cutting its balance sheet in July.
Bond rates spiked previously after the Federal Reserve's December minutes hinted at a March rate rise and disclosed conversations about shrinking the bank's $9 trillion balance sheet. The yield on the 10-year Treasury note increased 27.3 basis points to 1.769% the previous week, the most considerable weekly jump since September 2019. The yield increased slightly more early Monday, approaching 1.78%.
Additionally, the minutes prompted Goldman's senior economist Jan Hatzius to add a December rise to prior estimates for March, June, and September increases. "Reducing labor market slack has increased Fed members' sensitivity to upside inflation threats while decreasing their sensitivity to downside growth risks," he stated late Sunday.
He also mentioned the Federal Open Market Committee's (FOMC) debates over the Fed's balance sheet, which he said demonstrated a "greater sense of urgency than it was predicted."
Goldman now expects the balance sheet runoff to begin in July, one month earlier than previously forecasted in December, but added that it might occur much sooner. "With inflation likely remaining far over goal at that time, we no longer believe that the beginning of the runoff will serve as a replacement for a quarterly rate rise," Hatzius noted.
However, it is not all terrible news for stocks, which have been battered recently by increasing bond rates. Goldman's analysts anticipate a slowdown of the rising trend in bond yields in the following weeks, which may enable stock prices – which are sometimes more vulnerable to movements in bond yields than to their level – to regain some of their lost ground.
When was the last time you paid for groceries or coffee using dollar bills rather than a swipe of a card or your phone? You (and I) are part of a disappearing breed if you still use cash.
CryptoInstead of declaring war on cryptocurrency Chinese authorities appear to be putting things in order to further weaken the U.S. economy. China was pursuing a more calculated strategy, imposing reciprocal penalties and exporting its goods through intermediary nations.
Banks and FinanceOliver
The Pros and Cons of Accepting Cryptocurrency as PaymentDigital currencies entered the world of business and finance only in the late 2000s. As a decentralized currency and payment option, Bitcoin allowed individuals to transfer money without going through intermediaries. The underlying technology that supports Bitcoin, known as a blockchain, has been considered one of the most significant innovations of recent years.
Crypto Payments