Goldman Sachs on Fed - FJElite

Fed: Warsh was interpreted hawkishly. The dot plot was hawkish. As GIR put it: “The June FOMC meeting delivered a hawkish surprise, with nine participants projecting a hike in 2026 (vs. our expectation of three) and the median projection for 2027 Q4/Q4 core PCE inflation rising to 2.5% (vs. our expectation of 2.3%). Market pricing for the fed funds rate at the end of 2026 rose by 20bp in response to the projections and Chairman Kevin Warsh’s press conference.” Warsh’s apparent reluctance to provide forward guidance drove a meaningful flattening of the curve. My suspicion is that part of the pricing get walked back over coming weeks, but it was undeniably hawkish relative to what were already fairly hawkish expectations. For equities, I'm actually impressed by how well it was absorbed.