Goldman Sachs CEO David Solomon believes we may see a small change in interest rates this fall. He expects a reduction of 25 basis points and thinks there might be one or two more cuts soon after. Recent job data indicates that the economy is slowing. This week, Goldman Sachs will also see more initial public offerings (IPOs), marking a surge in IPO activity since July 2021.

Change in Monetary Policy

We are preparing for a potential change in monetary policy. A 25 basis point rate cut this fall seems very likely. Current market predictions show there is over an 80% chance of a cut at the next meeting. This expectation stems from the August 2025 jobs report, which revealed hiring had slowed more than expected. This economic slowdown gives the central bank a reason to begin easing rates, possibly with one or two additional cuts afterward. The August 2025 Non-Farm Payrolls report added only 145,000 jobs, falling short of the 170,000 expected, while the unemployment rate rose to 4.1%. A similar situation occurred in 2019 when the Fed began to cut rates in response to slower growth, which helped support risk assets for the rest of the year. At the same time, there is a clear resurgence of interest in the IPO market, making it the most active it has been since July 2021. This renewed confidence suggests we may see lower market volatility ahead. The CBOE Volatility Index (VIX) recently hit a yearly low of 13.5, indicating this trend.

Investment Strategies

Given this situation, we should consider adjusting our strategies for lower interest rates and a more stable market. Options strategies that thrive on lower volatility, like selling puts on major indices such as the S&P 500, look promising. This aligns with the idea that lower rates will support equity prices in the near future. Long positions in interest-rate-sensitive assets should perform well as the market anticipates the start of an easing cycle. This includes buying Treasury note futures, as bond prices typically rise when rates fall. It’s also worth looking into call options for sectors like technology and real estate investment trusts (REITs), which usually do well during times of declining rates. Create your live VT Markets account and start trading now.

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