: The market ‘may be overpaying you’ on a 10-year Treasury, says Lloyd Blankfein

by | Sep 27, 2023 | Stock Market

The Federal Reserve probably won’t need to keep interest rates higher for longer, Lloyd Blankfein, the former Goldman Sachs chairman and CEO, said Tuesday. While Fed Chairman Jerome Powell and other top Fed staff might continue to use tough rhetoric on the need to keep rates higher for some time, Blankfein thinks cuts to interest rates could be in the cards sooner than the central bank has been telegraphing.

“Inflation is probably within the 3s. Let’s say you successfully get it to the high 2s,” Blankfein said Tuesday during a talk on commercial real estate and the economy. “You don’t need 5½ percent interest rates at that point, when inflation is relatively subdued.” Powell reiterated at week ago that the Fed remains committed to getting inflation down to its 2% annual target, while indicating that it might not happen until 2026. His comments followed a decision to keep the central bank’s policy rate unchanged at a 22-year-high range of 5.25%-5.5%. The Fed last week also fortified a “higher for longer” stance by revising its forecast for rate cuts in 2024 to two, down from four, a move that spooked the stock market and sparked a surge in longer-dated Treasury yields. The 10-year Treasury yield
was up to 4.56% on Wednesday, near the highest since late 2007, according to Dow Jones Market Data. Rising long-term bond yields can signal recession concerns, since higher benchmark borrowi …

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