Goldman Sachs has significantly delayed expectations of the Federal Reserve's interest rate cut! Postponed from July to December

Source: Wall Street News

On Monday, Goldman Sachs significantly postponed its expectation of the Federal Reserve's interest rate cut to December this year. Prior to this, on the Nonfarm Payrolls day and before the Federal Reserve's May policy meeting, Goldman Sachs expected the Federal Reserve to take its first interest rate cut of the year in July.

According to the Chinese Ministry of Commerce, the high-level China-US economic and trade talks have made substantial progress, significantly reducing the bilateral tariff level. The US has cancelled a total of 91% of the additional tariffs, and China has correspondingly cancelled 91% of the counter-tariffs; the US has suspended the implementation of 24% of the "reciprocal tariffs", and China has also correspondingly suspended the implementation of 24% of the counter-tariffs.

Goldman Sachs' latest statement:

In view of these developments and the significant easing of financial conditions over the past month, we have raised our forecast for US economic growth in the fourth quarter of 2025 to 1%, an increase of 0.5 percentage points, and lowered the probability of an economic recession in the next 12 months to 35%.

We have lowered our expectation for the peak of core PCE inflation from the previous 3.8% to 3.6%.

Nick Timiraos, a well-known financial journalist known as the "New Fed News Agency," cited Goldman Sachs' statement of postponing the interest rate cut expectation to December this year on the X platform:

Earlier on the same day, Citigroup postponed its expectation of the Federal Reserve's interest rate cut by one month, from June to July.

Goldman Sachs also said on Monday, "The significant reduction of US tariffs on China will have a limited impact on the overall effective tariff rate, only causing a small decline of less than 2 percentage points in the current effective tariff rate in the US. Considering this reduction, the breadth and level of the overall US tariffs are still far higher than the market's expectations at the beginning of this year."

Goldman Sachs' pessimistic outlook on the Federal Reserve's interest rate cut is not rare on Wall Street. Currently, options traders are大举建立对冲头寸 to guard against the risk that the Federal Reserve may not ease its monetary policy this year. One of the growing positions expects that the Federal Reserve will not cut interest rates in 25.

At the end of trading in New York on Monday, traders expected that the Federal Reserve would only cut interest rates twice this year, and the yield on short-term US Treasury bonds rose by more than 10 basis points:

The yield on the two-year US Treasury bond rose by 10.47 basis points to 3.9956%, with an intraday trading range of 3.9077%-4.0166%, and it refreshed its daily high at 19:02 Beijing time.

The yield on the 10-year US Treasury bond rose by 8.45 basis points to 4.4630%, and it was in an upward trend throughout the day, with an overall trading range of 4.3981%-3.4669%.

Currently, there is a divergence between the US stock and bond markets: Since Trump announced the suspension of the "reciprocal tariffs," the US stock market has basically recovered its decline, but the bond market is far from "recovery".

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