Goldman Sachs Co-Head Ashok Varadhan Urges Investors to Stay the Course

Ashok Varadhan, co-head of global banking and markets at Goldman Sachs, told listeners of the firm’s “The Markets” podcast that investors should remain fully invested despite recent market turbulence. He cited three pillars for his optimism: the Federal Reserve is unlikely to raise rates later this year, crude-oil prices are expected to fall well below $70 a barrel as the year progresses, and the U.S. economy’s underlying strength will be amplified by productivity gains from artificial-intelligence (AI) deployment.

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Varadhan’s view on rates runs counter to market pricing that still assigns a roughly 50 % chance of a September hike and about 63 % for an October move, according to the CME Group’s FedWatch gauge. He attributes the easing of inflationary pressure to receding tariff effects and a potential de-escalation of tensions in the Strait of Hormuz. On energy, he expects West Texas Intermediate to retreat from recent $80-plus levels, citing an anticipated “settling back down” of oil.

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Regarding the broader economy, Varadhan highlighted that nominal growth has stayed “remarkably durable” despite external shocks. He believes AI-driven productivity will eventually act as a disinflationary force, offsetting short-term resource strain from AI infrastructure build-out. The S&P 500 has recently reclaimed a record high, delivering more than 13 % total gains in 2026, reinforcing his constructive stance on equities and credit markets.

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Varadhan emphasized that, absent further exogenous shocks, the economy’s resilience should keep realized default rates “fairly low” and allow credit spreads to remain modest despite heavy issuance. He reiterated that investors need not anticipate additional rate hikes and that lower energy costs will further support inflation moderation.

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• “Stay invested would be my advice,” — Goldman Sachs' Ashok Varadhan

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• “I don't think we will see hikes in the latter part of this year,” — Goldman Sachs' Ashok Varadhan

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• “If you think the exogenous shocks are going away and you still have the resilience of the economy,” — Goldman Sachs' Ashok Varadhan

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The co-head’s message suggests a continued bias toward equity exposure and confidence in credit markets, provided that the anticipated decline in oil prices and the absence of further rate hikes materialize. Investors are encouraged to monitor Fed policy signals, energy price trends, and AI-related productivity developments as the primary variables shaping market performance.

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