Goldman Sachs Group economists adjusted their forecasts, believing that the Federal Reserve will start cutting interest rates in September rather than July as previously anticipated, because US economic data shows that economic resilience still exists, which is not enough reason to relax monetary policy.

Goldman Sachs economists, including Jan Hatzius (Jan Hatzius), wrote in a report: “Earlier this week, we noticed comments from Federal Reserve officials implying that July interest rate cuts would require not only an improvement in inflation data, but also a clear sign of weakness in economic activity or labor market data.”

Goldman Sachs was once one of the last banks on Wall Street where the Federal Reserve was expected to start cutting interest rates in July. Goldman Sachs made this reversal as the market became more convinced that policymakers would take a cautious approach when easing policies, given that the US economy was still strong.

After the US durable goods order data for April exceeded expectations, the price of US bonds declined slightly, further dispelling expectations that the Federal Reserve would cut interest rates rapidly. The 10-year US Treasury yield rose 1 basis point to 4.48%, close to the highest level in more than a week. The University of Michigan Consumer Confidence Index released late Friday recorded 69.1, exceeding expectations of 67.5.

Earlier this week, Nomura Securities also postponed its forecast from July to September, saying “the threshold for (the Federal Reserve) to cut interest rates seems to have been raised.” Goldman Sachs CEO David Solomon (David Solomon) is more hawkish than his economists, saying he doesn't expect any interest rate cuts this year.

According to the swap market pricing, the market is currently fully priced and the first time the Federal Reserve will cut interest rates will be in December. The chance of a second rate cut is less than 30%, compared to about 70% last week. By the end of 2023, the first rate cut was expected to be as early as March.

Data on Thursday showed that business activity in the US accelerated at the fastest rate in two years in early May. Atlanta Federal Reserve Chairman Bostic said that the current round of monetary policy is not as effective as the previous cycle in slowing down economic growth, and emphasized the need to maintain high interest rates for a longer period of time to curb inflation.

The 10-year US Treasury yield has risen about 60 basis points year to date.

Despite this, Goldman Sachs still anticipates that by the end of 2024, the Federal Reserve will cut interest rates twice, on average once every quarter or every other meeting. This means that if things unfold as predicted by its economists, the second time the Federal Reserve cuts interest rates will occur in December.

A few institutions, such as J.P. Morgan Chase and Citigroup, are still exceptions that insist that the Federal Reserve will cut interest rates in July.