The Fed Cut Playbook

In this episode of "The Markets," Mike Washington interviews Josh Schiffrin, Chief Strategy Officer and Head of Financial Risk at Goldman Sachs, to discuss the current state of the markets. They analyze mixed inflation data, focusing on the surprising weakness in the labor market as indicated by the latest NFP numbers. Schiffrin anticipates the Fed will likely ease monetary policy with a 25 bps cut in September, but believes the pace of future cuts will be data-dependent, particularly on labor market performance. He expresses a bearish outlook on the dollar due to lower short rates and high deficits, while remaining cautiously optimistic about equities, supported by AI momentum. Schiffrin's favorite trade is being long short-dated treasuries, especially in the five-year sector, and he's watching the payroll report in early September and developments in the AI sector closely.