- Investors should put money to work in markets when they're offering a higher yield than bank accounts, Goldman Sachs's Ashish Shah said on CNBC.
- Markets will be volatile as the Fed leans on data to determine policy moves, but it's better to be "buying when there's fear in the market," said Shah.
- Markets are gearing up for Fed Chair Powell's Jackson Hole speech on Friday.
While investors wait for Federal Reserve Chair Jerome Powell to take center stage in the global markets on Friday, it's a good time for them to pursue wealth-building in the markets by moving money out of lackluster bank accounts, Goldman Sachs' Ashish Shah told CNBC on Thursday.
"We think the market is kind of overpriced in front of the Fed. We think the rates market is fearing [Friday] and hawkish speak," but Powell will likely deliver a balanced message, said Shah, chief investment officer for public investments at Goldman Sachs Asset Management. "So on the margin, I think you can generate some returns short-term by being long-duration," in the debt market, he said.
Shah's appearance came before Friday's scheduled speech by Powell at 10 a.m. at the Federal Reserve's annual economic symposium in Jackson Hole, Wyoming. Central bankers kicked off the gathering on Thursday. Powell's speech is "going to be kind of a mix of, 'We still have work to do. This is a long fight but we're making progress,'" Shah said.
Meanwhile, Shah said Goldman is telling clients that markets will be volatile as the Fed will be data-dependent in deciding what's next for monetary policy as it battles high inflation. But it's better to buy "when there's fear in the market," he said. "Don't fall into the trap of buying when there's FOMO," or widespread "fear of missing out" sentiment.
"A lot of the hard work has been done by the Fed in messaging. A lot is priced into the [yield] curve and kind of the easiest thing you can do here is to actually get your money invested," said Shah.
"What we're seeing is that most banks are not offering customers any yield ... and so getting your money out of a low-yielding bank account, where you're still earning zero, and getting it into the market where now suddenly you earn two, two and a half percent, three percent, in the coming months, is going to be a big deal."
The 10-year Treasury yield was around 3.11% on Thursday and the 30-year bond yield was at 3.31%. Bond yields and prices move inversely. The shorter-term 2-year yield was at 3.37%.
