HomeFinancial MarketsMarkets Too Optimistic Following U.S. Inflation Drop, Goldman Sachs Claims

Markets Too Optimistic Following U.S. Inflation Drop, Goldman Sachs Claims

Strategists from Goldman Sachs claimed on Sunday that U.S. inflation will not decline as quickly as markets are expecting. The strategists observed that while investors may believe that cooling inflation could result in the rapid easing of price pressures, there is the potential for delayed-onset inflation” in sectors such as healthcare.

“Although we expect further declines in inflation going forward, markets appear considerably more optimistic than we are about the pace of cooling,” the Goldman strategists wrote in a note to investors.

The Goldman strategists added that they expect factors that have influenced the inflation cooldown so far to have a limited impact on price changes in the near future. While the Federal Reserve paused its interest rate hiking agenda on Wednesday, the central bank mentioned new projections indicating that further hikes may be needed as inflation declined at a slower rate than required.

Goldman strategists recommend that investors who agree with this assessment buy one-year swaps to bet on inflation so as to realize higher market prices than there are as of present.

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