Riding the AI Wave
Episode publishedPodcast: Goldman Sachs ExchangesGoldman Sachs Exchanges
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This is the markets. I'm Chris Hussey, and today is Thursday, April 30, and I'm here on the trading floor with Anshul Sabal, who's global co head of fixed income currency and commodities within global banking and markets. Anshul, thanks so much for joining us here in the markets.
Thank you for having me.
Alright. We're coming right in the wake of the Fed that came in yesterday afternoon. A little hawkish tilt maybe. Powell said he's gonna stick around. Rate shrugged. What are making about?
Little bit of a divided committee. So if you see where the Fed was after the prior meeting, they were signaling one cut this year, largely because they expected labor markets to continue to be soggy. Since then, we got labour market data that was actually strong. The US consumer seems to be in better shape than what the Fed had projected. And, of course, you've got the war, which is inflationary, a supply side shock, which the Fed doesn't really have the tools for, but still, they don't want inflation expectations to become entrenched. So if you look at pricing for the ECB, we just had the ECB
Yeah. And, of course, Powell ended the meeting by saying, You won't see me later, and that means you're gonna see Warsh later.
Well, he got confirmed.
So Yeah. He got confirmed. So how does that play out in the Fed's next move?
That's a very interesting question. So Warsh, of course, he's spoken a lot about about his long term views, so he's got that on the balance sheet. He wants to factor what the Fed does and what the US Treasury does. That's not to say that they'll set policy independently. They will essentially collaborate. But right now, the way it's been since the GFC is that the Fed's QE program and its balance sheet essentially has an impact on longer dated yields, and of course, the Treasury's issuance patterns also have an influence on longer dated yields. He wants to factor that out, have a smaller balanc
It's true, and I guess underlying that whole bit is this tension between growth and inflation and how that is the two mandates of the Fed. But, you know, put that fixed income currency and commodities hat on for you for a second. Look across all those markets that you see here because oil's still going up, or at least it's elevated, and, you know, the rates markets are still kind of elevated a little bit too, and yet credit and equities, they don't seem to care at all about this. How does that make sense? Make sense of it all to us as a market watcher.
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