Episode summary
Markets Ready for Fed and Tech Earnings | Bloomberg Surveillance
Bloomberg Surveillance
· · 29 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Kay Haigh, Ian Wyatt, Ian Lyngen, Julia Wilson
Summary
The discussion centered on a Fed meeting framed as a test of how much more volatility investors should expect at the short end of the curve. Goldman Sachs Asset Management’s fixed income view was that inflation is stickier, commodity prices are adding pressure, and heavier issuance from governments and companies is pushing long yields higher. The case for bonds was not to buy blindly, but to be selective because a large wave of IG and tech-related supply is coming.
Huntington Bank’s chief economist argued the Fed is still biased toward higher rates because labor data remain relatively stable while inflation is easing only gradually. He said the market has to think about timing: a hike could be followed by more tightening if the Fed believes neutral rates are higher. He also said the real 30-year yield near 2.9% signals a market that is demanding a much higher risk premium.
On the consumer side, KPMG said back-to-school spending is still growing, but unevenly. Higher-income households are spending more, while lower-income families are pressured by gas, housing, and credit use. The panel agreed the consumer is still spending, but increasingly begrudgingly and with sharper trade-offs.
Key takeaways
- Goldman Sachs Asset Management said higher-for-longer short rates and heavier Treasury and corporate issuance are likely to keep pressure on the long end of the curve.
- The guest from Huntington Bank said the Fed is biased toward higher rates because labor remains stable while inflation is still sticky enough to justify caution.
- BMO Capital Markets said the 2.9% real 30-year yield shows investors are demanding a much larger inflation risk premium.
- KPMG said back-to-school spending is up 6%, but the gains are uneven across income groups and are being funded partly by cutbacks elsewhere.
- The consumer is still spending, but KPMG said rising gas costs and credit use are increasing pressure on lower-income households.
Notable quotes
“the market still needs to figure out what that means in terms of kind of policy and reaction function”
“if they go once, the market's going to price in another three or four”
“I think it's a clear indication that There are a lot of reasons to be nervous about whether it is a higher RSTAR”
“the headline number is uh school spend is up 6%”
How the episode opens
Bloomberg Audio Studios podcasts radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m.
Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. joining us right now uh with Goldman Sachs Asset Management Kh uh joins us here.
You're out of London, out of Bristol, you are out of the land of central bank disscent. I love when the Bank of England comes out, everybody's angry, everybody's arguing. Do you see where you sit and where you digest Yanhi's economics?
Do you see a Fed that's going to become more like the Bank of England? Well, good morning. It's tough to tell at this stage.
It should be very interesting to see actually how today's meeting goes. Um I think will give us a little bit of a flavor of what is to come. Um I think the market understands very clearly that you know there's going to be less forward guidance going forward but the market still needs to figure out what that means in terms of kind of policy and reaction function.
So let's be open-minded about that. But it is it is really very likely to your point that we're going to get a little bit more volatility at the short end going forward given the way the Fed's likely to communicate.
Your market your fixed income markets I mean it's been higher for longer. Is that the new world for you guys? Higher for longer here. I'm looking at the 10ear at 460 something. I mean that's not I kind of thought the 450 was my ceiling and then we blew you guys blew right past that.
Well, there's a couple of things going on.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed rate outlook
- fixed income outlook
- us rates strategy
- consumer and retail pressure
- tech earnings momentum
Companies and tickers mentioned
- GS
- HBAN
- BMO
- Goldman Sachs Asset Management
- Huntington Bank
- BMO Capital Markets
- KPMG
Watch the episode
Watch “Markets Ready for Fed and Tech Earnings | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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