Interest Rates
Ongoing coverage on Interest Rates.
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Goldman’s Varadhan lays out a three-part case for staying in the market
Ashok Varadhan, co-head of global banking and markets at Goldman Sachs, advises investors to remain invested despite concerns about interest rates, energy costs, and economic expansion. He predicts interest rates will stay on hold, oil prices will fall below $70 a barrel, and the economy will remain durable, potentially boosted by AI productivity gains.
Rate limbo is steering the ETF industry’s next push toward CLOs
The current uncertain interest rate environment is driving increased interest in Collateralized Loan Obligations (CLOs) within the Exchange-Traded Fund (ETF) market. Experts like Todd Rosenbluth of VettaFi suggest CLOs are the next frontier for ETF innovation, offering attractive yields and relative stability through short-duration, floating-rate secured loans. While new CLO ETFs are launching, advisors are cautiously incorporating them as supplementary holdings rather than core investments, with a focus on higher-rated tranches to mitigate risk.
Traders slash September Fed hike bets as July payrolls turn negative
Traders have significantly reduced bets on a September interest rate hike by the Federal Reserve following a negative July jobs report. The U.S. economy lost jobs, leading markets to price in a higher probability of the central bank holding rates steady. However, upcoming inflation data will be crucial in determining the Fed's next move, with potential hikes still considered for later in the year.
Fed Governor Lisa Cook Warns She’ll Back Rate Hikes If Inflation Stays Hot
Federal Reserve Governor Lisa Cook stated she is prepared to support raising interest rates if inflation does not show signs of improvement, citing concerns that persistently high inflation could become entrenched. While acknowledging a recent dip in energy prices, she cautioned against overreacting to single data points and highlighted ongoing pressures from tariffs, energy supply shocks, and AI buildouts. Cook indicated that the central bank does not have the luxury of waiting if disinflationary trends do not continue.
