Inflation Should Give Fed Cause for Concern: Wilson

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July 15 (Bloomberg) -- Goldman Sachs Asset Management International Chief Executive Officer of EMEA Andrew Wilson previews Federal Reserve Chairman Janet Yellen’s testimony before U.S. lawmakers and the impact of monetary policy on the economy. He speaks with Jonathan Ferro on Bloomberg Television’s “On The Move.”

Impact of where we are.

Goldman sachs cut, they think the aussies will cut rates.

Thank you very much.

Let's bring in andrew wilson, chief executive of goldman sachs asset management for europe, africa.

It has to be janet yellen's speech.

Are we expecting any surprises?

We are not expecting any surprises.

Markets are not forecasting as much as the fed themselves are.

She will try to adjust those expectations in a similar way that mark carney did.

Try to reassure markets that the rate hike is some way off.

That will happen sooner than people expect.

The inflation numbers are not going up sharply.

If we measure cpi, ppi, all of those things taking up a little bit.

The problem is, janet yellen is calling that noise.

When you see inflation steadily moving higher, it is still at very benign levels.

I think -- i understand the aspect of it.

Look what has happened to the labor market.

Wages are lagging indicator.

At some point, they will start to move higher.

Introducing a little bit of hawkishness, she might, but should she?

We certainly think she should.

The economy is well above three percent.

If we continue to see payroll numbers around 270,000, if we have two or three months of that, perhaps the unemployment rate is below six percent.

We got a subtle hint -- she could be quite scared that we get round towo.

Yields are only 2.5% on 10 years.

We are much closer to the end of tapering.

Very explicit at the fomc that they will finish in october.

We might see the start of the exit strategy.

Rv would be they will talk more about the next phase -- our view would be they will talk about the next phase.

Talk to me about how this plays out in the treasury market.

How does this play out for the back half of this year?

We think the yield will get to three percent.

It will depend on the data.

If we see that payroll growth, all of those things point to much higher 10 year yields.

This text has been automatically generated. It may not be 100% accurate.


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