Goldman Sachs CEO David Solomon weighs in on the Israel-Hamas conflict, a “fragile” economy and the Federal Reserve’s next interest rate moves.
As the Federal Reserve prepares to make another decision on interest rates, market participants are in tune with the mandate recently telegraphed by policymakers to keep interest rates higher for longer.
The 10-year Treasury yield is already near 5%, a 16-year high. According to Edmunds.com, mortgage rates for a 30-year fixed-rate mortgage are nearly 8%, new car loans are 7.4% and used car loans are 11.4%.
The yield on 10-year government bonds is almost 5%
Many wonder how far interest rates could rise and whether we could reach levels like those in the 1970s and 1980s, when the federal funds rate reached nearly 13% in 1974 and 19% in the 1980s, according to Federal Reserve data .
| ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| G.S | THE GOLDMAN SACHS GROUP INC. | 289.90 | -6.91 | -2.33% |
In an exclusive FOX Business Network interview with Goldman Sachs CEO David Solomon, he downplayed that likelihood.
“I graduated from high school in 1980. So I remember those days. Well, I don’t think we’re going back there. I don’t think that’s likely. But I think we will survive.” “In a more normalized environment and not a money-free environment,” he said during an appearance on FOX Business’ “Cavuto: Coast to Coast.”
Mortgage rates rise again to almost 8%
He added that the more normalized interest rate scenario cited by Solomon is currently likely at 5.25% to 5.50%.
“I think there is a risk that interest rates could rise. I do believe that inflation will remain stubborn. She is currently particularly present in connection with work. And that has to have an effect that trickles down,” Solomon added, pointing out the Fed is currently “data dependent.”
Labor costs are rising as UPS Teamsters recently signed a new five-year contract worth about $30 billion. This is because the UAW is negotiating new contracts with Ford and Stellantis while negotiations with GM are still ongoing.
Workers demonstrate at the Ford assembly plant as the UAW strike against the three major U.S. automakers continues in Chicago on October 10, 2023. (Scott Olson/Getty Images)
Pharmacists are leaving their jobs in droves
| ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UPS | UNITED PARCEL SERVICE INC. | 134.87 | -3.32 | -2.40% |
| F | FORD MOTOR CO. | 9.96 | -1.41 | -12.37% |
| STLA | STELLANTIS NV | 18.05 | -0.42 | -2.30% |
| GM | GENERAL MOTORS CO. | 27.22 | -1.34 | -4.69% |
Federal Reserve Chair Jerome Powell speaks during a meeting of the Economic Club of New York in New York City on October 19, 2023. (Brendan McDermid / Portal Photos)
The Fed is expected to leave interest rates unchanged on Wednesday, but likely leaves the door open for another rate hike at the December meeting.
Despite a likely further rate hike, Solomon noted that the U.S. economy can endure.
“I think one of the big tailwinds we have as an economy is that most Americans who own homes are taking out long-term mortgages that have fundamentally low interest rates tied to them for a long time,” he noted.
With the Fed cutting interest rates, many Americans had the opportunity to secure a 30-year fixed mortgage rate or refinance at a low interest rate of 2.68% in 2020.
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