Goldman Sees More Two-Year Volatility Under Warsh Fed

Summary

Kay Haigh, Goldman Sachs Asset Management, discusses the hawkish Fed outcome under Chairman Warsh and its implications for Treasury volatility. He expects more two-year yield swings due to data-dependence and reduced forward guidance, while long-end Treasury volatility may fall and make duration more appealing. Oil prices could see near-term support from reserve restocking.

• Fed meeting was hawkish, prioritizing inflation and data dependence.
• Two-year Treasury yields likely to see elevated volatility going forward.
• Long-end yields may experience less volatility, offering a more attractive opportunity.
• Long-duration Treasuries become marginally more supportive for investors.
• Oil prices could see upward pressure from countries replenishing reserves.
• Fed task forces on balance sheet, communication, and inflation sources could reshape future policy.