Goldman Recommend Receiving Dec-24 FOMC OIS

Late on Goldman Sachs wrote “our economists’ estimate of core PCE remains below the Fed’s projection, and there should still be plenty of time for the Fed to ease 3-4 times this year if it wishes to.”

• “At the very least, we do not anticipate data in the near term to be conclusive enough to remove this as a modal outcome or to lead to a repricing of a shallower right tail (resumed hiking) with sufficiently high probability to offset the deeper left tail (rate cuts).”
• “On the other hand, we could easily see a scenario where a return to the disinflation trend seen over the past few months leads to a shift in modal outcomes again, and in negative growth outlook scenarios — for instance, due geopolitical conflict, or concerns about the delayed impact of higher yield levels — leading to markets placing higher odds on the deeper left tails.”
• “Given this asymmetry, we recommend receiving the US front end via Dec-24 FOMC OIS.”
• That recommendation came with the contract trading at 4.46%, with Goldman targeting a move to 4.05% and setting a stop at 4.65%.