Goldman Models Impact of Rate-Shock Scenarios on Markets
- Surprise hikes would hurt stocks, boost yields and dollar
- Goldman model shows recession risk has increased over 2018
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Goldman Sachs Group Inc. economists have proposed some “rules of thumb” for the impact of Federal Reserve interest-rate hikes on financial conditions and the U.S. economy, which showcase the importance of policy makers’ communications.
While an unexpected 1.5 percentage points of Fed rate rises would tend to boost 10-year Treasury yields by 45 basis points, cut equity prices by 9 percent and boost the dollar by 4 percent, anticipated monetary moves have a “much smaller” effect, Goldman’s modeling showed.