Goldman Sachs are still expecting rate cuts from the Federal Open Market Committee (FOMC) in 2024:
Fed cuts are not imminentexpect the next few inflation reports to be softerand have thus stuck with forecasting a cut in July and then in November
GS warn that “even moderate upside surprises could delay cuts further”.
On US stocks:
equity valuations are constrained by rising bond yields that reflect investor fears of persistent inflation, but even in the face of climbing rates, the S&P 500 has returned 6% this year and is just 4% below its all-time-highbut stocks can continue to rally if higher-for-longer interest rates are driven by resilient economic growth as opposed to hawkish policytwo-thirds of companies have beaten EPS estimates with an average surprise of 9%flood of generally positive micro earnings results“We expect earnings growth will lift the index by 3% to our year-end target of 5200. While our economists expect continued disinflation that will lead to rate cuts later this year, the delayed interest rate cuts should constrain equity valuations”
This article was written by Eamonn Sheridan at www.forexlive.com.