Goldman Sachs vice chairman Rob Kaplan warned Fed may need to raise rates in September if inflation stays elevated, suggesting multiple hikes. Swaps traders drove two-year Treasury yields 17 basis points higher to 4.17% while oil prices fell after an Iran deal reopened the Strait of Hormuz.
Rob Kaplan, Goldman Sachs vice chairman and former Dallas Fed president, warned that persistent inflation could necessitate an interest-rate increase as soon as September. He noted that Fed policy changes typically come in multiple moves, suggesting that markets should prepare for a series of hikes if inflation does not cool.
Following Kaplan's comments and hawkish Fed projections, swaps traders began pricing a 25 basis point increase by October, compared with earlier bets on March 2027. Two-year Treasury yields climbed 17 basis points to 4.17%—their largest one-day jump since March—reflecting growing expectations of tighter monetary policy.
Oil prices declined after a landmark Iran peace agreement reopened the Strait of Hormuz, easing supply concerns. The drop in crude benchmarks could affect Goldman Sachs’ commodity trading desks and reduce volatility in energy markets.
