Betting on June rate cuts or shorting U.S. Treasuries? An article explaining Goldman Sachs and JPMorgan's differences and investment strategies

Beijing Time, February 13 evening, the U.S. Bureau of Labor Statistics released a key inflation report. Data shows that the U.S. January CPI increased by 2.4% year-over-year, below the market expectation of 2.5%, while core CPI rose by 2.5% YoY, hitting the lowest level since 2021.

Following this data release, which is favorable for rate cut expectations, traders quickly adjusted their bets. As of February 14, the market anticipates a total of about 63 basis points of rate cuts by the end of the year, placing the Fed’s rate cuts in the middle ground between two and three times this year. Traders have fully priced in the possibility of rate cuts before the July meeting and see a high probability of action in June.

Goldman Sachs’ Firm Stance: First Rate Cut in June, Four Cuts Throughout the Year

Amid a fog of data, Goldman Sachs’ voice stands out. Jonny Fine, head of global investment-grade credit at Goldman Sachs, explicitly stated in mid-February that he expects the Federal Reserve to cut rates four times this year, with the first cut in June, followed by phased reductions through 2026.

Fine attributes his dovish stance to leadership changes at the Fed. He believes that with Kevin Warsh as Fed Chair, the Federal Reserve will adopt a more forward-looking approach to monetary policy decisions. He even predicts that the U.S. 10-year Treasury yield could fall to 3.5% later this year. This view is echoed by hedge fund heavyweight and Greenlight Capital founder David Einhorn, who believes that under Warsh’s leadership, the Fed’s rate cuts will far exceed current market expectations.

JPMorgan’s Contrarian Play: Short Selling 2-Year U.S. Treasuries

In stark contrast to Goldman Sachs’ optimism, JPMorgan strategists in a report on February 12 directly recommended investors to take a tactical short position on 2-year U.S. Treasuries.

Led by Jay Barry, the strategists provided two core reasons:

Strong U.S. economic fundamentals: They wrote, “The U.S. economy remains robust, and even if Kevin Warsh is confirmed as Fed Chair, it will be difficult for the Federal Open Market Committee to be swayed by his preferences.” This means that regardless of who leads the Fed, strong economic data will limit the scope for significant rate cuts.

Sticky core inflation exceeds expectations: JPMorgan forecasts that U.S. January core CPI will increase by 0.39% month-over-month, higher than Bloomberg Economics’ estimate of 0.31%. They believe that due to early-year price pressures, short-term yields will find it hard to decline significantly from current levels, making shorting short-term bonds a reasonable strategy.

Crypto Market Linkage: How Macroeconomic Liquidity Expectations Affect Gate-Related Assets

As macro uncertainties intensify, the correlation between crypto markets and traditional financial assets is increasing. As of February 14, according to the latest market data on Gate, optimistic CPI data has positively impacted crypto prices, with Bitcoin (BTC) surging over 4%, approaching the $69,000 level; Ethereum (ETH) gained more than 6%.

For Gate’s native token GT, macro liquidity expectations are equally important. As of press time on February 14, GT’s price on Gate remains resilient. According to Gate’s trading data, GT (Gatechain Token) is currently fluctuating around $7.

If Goldman Sachs’ forecast proves correct—that the Fed will start cutting rates in June and maintain significant easing throughout the year—it would mean more dollar liquidity entering the market, generally benefiting risk assets like Bitcoin and potentially transmitting to platform tokens like GT, pushing its price higher.

However, if JPMorgan’s view is correct—that the economy remains resilient and rates stay high (profitable for shorting Treasuries)—risk assets might face short-term pressure. From another perspective, a high-rate environment could also drive funds seeking higher yields into assets like DeFi staking or Launchpad participation, which could increase actual demand for assets like GT.

Summary

The divergence between Goldman Sachs and JPMorgan essentially reflects a battle between “policy shift expectations” and “economic resilience reality.” For users monitoring the market on Gate, this divergence signals opportunities amid volatility.

Based on Gate’s market response on February 14, the crypto market appears to lean more toward believing Goldman Sachs’ “liquidity easing narrative.” However, in practical terms, investors should closely watch March’s inflation data and the actual policy stance after Warsh’s appointment. Whether it’s a “soft landing” or a “no landing,” utilizing spot, derivatives, and wealth management tools on a comprehensive platform like Gate is key to seeking certainty amid macro shifts.