Goldman Sachs Group Inc. says there’s a 40% chance the Federal Reserve will raise interest rates in July — almost double what the bond market projects — as Chair Janet Yellen kept prospects for a move this year alive.
Yellen presented an upbeat view of the economy in a speech Monday, even after weaker-than-expected U.S. jobs data on June 3, Goldman Sachs analysts including New York-based Chief Economist Jan Hatzius, wrote in a note to clients. The firm is one of the 23 primary dealers that trade directly with the U.S. central bank.
Yellen’s remarks in a speech in Philadelphia sent 10-year Treasuries to their biggest decline since May 18, unwinding some of last week’s biggest gain in almost five months. She said the U.S. economy was making progress although she was silent on the timing of another rate increase. The Fed will stay on hold at its June 14-15 meeting, according to the Goldman Sachs report.
“The basic macro economy in the U.S. is very firm,” said Kei Katayama, a bond manager in Tokyo at Daiwa SB Investments, which has about $50 billion in assets. “Yellen wants to hike the rate, even in July.”