Goldman, BofA Push Back Rate-Cut Calls Amid Inflation Risk
Goldman Sachs and Bank of America have become the latest Wall Street banks to delay their Fed rate-cut forecasts, citing strong jobs data and rising inflation pressures from the Iran war. Market expectations for near-term cuts are shrinking as CPI arrives Wednesday.
RKey facts
- Goldman Sachs and BofA delayed first-rate-cut forecasts
- April CPI due Wed 8:30 ET; consensus expects higher print than expected
- Oil prices surged on Hormuz closure; broader inflationThe rate at which prices rise across an economy. risks widening
- China's central bank warned of imported inflationThe rate at which prices rise across an economy. from higher oil prices
- KKR injected $300M into private credit fund amid rising bad loans
What's happening
A growing cohort of Wall Street banks is pushing back rate-cut expectations. Goldman Sachs and Bank of America both delayed their first-cut forecasts after April's strong jobs numbers and amid inflationThe rate at which prices rise across an economy. concerns triggered by elevated oil prices from the Iran conflict. This marks a significant shift from the dovish consensus of earlier in the year, when rate cuts seemed imminent by June.
The inflationThe rate at which prices rise across an economy. narrative has hardened. Oil prices have surged on the Hormuz closure, hitting the broadest array of imports. Fertilizer prices are soaring, affecting agricultural and food costs globally. Central banks are explicitly warning of imported inflation risks: China's central bank flagged the threat, and India is considering emergency measures including curbs on gold and electronics imports and potential fuel price hikes. The April CPI print, due Wednesday, will capture the full impact of pump-price surges, and consensus expects a 'spicier' number than markets are pricing.
For the Fed, this creates a bind. InflationThe rate at which prices rise across an economy. is broadening beyond core goods; the supply-side shocks (Iran war, geopolitical fragmentation) cannot be solved by demand destruction alone. The central bank's traditional tools are mismatched to the problem. Meanwhile, equity markets are near all-time highs on AI enthusiasm, and the financial system is fragile: KKR just had to inject $300 million into a private credit fund facing rising bad loans and falling valuations, signaling cracks in alternative credit markets.
Market implications are immediate. Rate-sensitive equities (growth tech, unprofitable names) could face pressure if cuts are delayed; bonds will reprrice higher if inflationThe rate at which prices rise across an economy. sticks. The narrative shift from 'dovish Fed pivot' to 'central banks behind the curve' is now driving trading flow. Watch for the Wednesday CPI print and any Fed official commentary; if inflation surprises to the upside, expect a sharp repricing of 2026 rate expectations and a corresponding equity selloff.
What to watch next
- 01US CPI data for April: Wed 8:30 ET
- 02Fed official commentary on inflationThe rate at which prices rise across an economy.: this week
- 03Market repricing of 2026 rate expectations: post-CPI
- ForexLiveinvestingLive Americas market news wrap: Tech reverses lower, USD/JPY remains on watch
US May existing home sales 4.17m vs 4.07m expected US International trade balance for April -$55.9B vs -$56.1B estimate SpaceX IPO said to be almost four-times oversubscribed Anthropic releases Claude Fabel 5, it's "Mythos-class" model. Trump: Iran responsible for shooting down Apache Helicopter. Must respond militarily. Reports of explosions in Tehran Canada April trade balance +$2.72 billion vs $2.57 billion expected US May NFIB small business optimism index 95.3 vs 96.0 expected Markets: Gold down $72 to $4256 WTI crude oil down $2.77 to $88.54 GBP leads, AUD lags US 10-year yields down 2.6 bps to 4.52% S&P 500 down 0.3% It was a tough day to pin down with any one theme. There is a tug-of-war ongoing in tech and chip names that started positively today and then rapidly soured. At one point the Nasdaq was down 2% and it was looking like a rout. There was some fishing near the bottom and then the release of Claude Mythos (called Fable 5) and indications that the SpaceX IPO are 4x oversubscribed help sentiment. At the same time, the market didn't like the news that Iran had knocked out a US Apache helicopter with drones. What might have also cushioned the blow was that Trump appeared measured in his response to the helicopter strike, as he said the pilots were ok and indicated he was reluctantly attacking. There was one report of explosions in Tehran but it's not verified that the US struck, or how Iran will see it. There is a more-recent report that the US will launch major strikes. The official line from Iran is that the drone strike wasn't on purpose. That's hard to believe but it also shows they would rather have peace than escalation. Outside all of that, Israel continued to strike southern Lebanon, which is a real problem in negotiations. In terms of economic data, it was solid but inconsequential as the market is awaiting this week's CPI report. In FX, the US dollar was generally weaker but there was a kink as USD/JPY rose as high as 160.44 and remains u
13m ago - PR Newswire FinancialBofA Kicks Off FIFA World Cup 2026™ With 2 Million Free Fan Bands and Fan Experiences Nationwide
Soccer Fans Can Build, Trade and Collect Custom BofA Fan Bands Featuring 140 Unique Beads Inspired by Iconic Host Cities and Teams Key points Bank of America, the Official Bank of FIFA World Cup 2026™, distributing more than 2 million BofA Fan Bands and 10 million beads The BofA Fan Bands...
1h ago - Yahoo FinancePrediction: SpaceX, Anthropic, and OpenAI Will Push the S&P 500 Dividend Yield to an All-Time Low. Here's What Income Investors Can Do About It.2h ago
- Yahoo FinanceThe S&P 500 Just Added This AI Semiconductor Stock For Index Investors3h ago
- Nikkei AsiaJPMorgan Chase emerges as SoftBank Group's top lender, surpassing Mizuho3h ago
- CNBC Top NewsBTIG says tech stocks are still broken, watch for Friday’s low to be taken out
The Nasdaq Composite slumped 4.18% Friday, its worst day since April 2025.
4h ago - Yahoo FinanceThe Vanguard S&P 500 ETF Is Unstoppable -- But There's 1 ETF I Like Even More4h ago
- BloombergJPMorgan-Led Group Plan Sale of Qualtrics’ Hung Debt at Year End
A group of banks led by JPMorgan Chase & Co. is planning to offload about $5.3 billion in financing for software firm Qualtrics International Inc. later this year in a bid to shift the hung debt off their books.
4h ago
Related coverage
- XLU Trails SPY by 500 Basis Points as Portland General Raises Data Center Rates 30 PercentEquities US··0 mentions
- Blackstone BCRED Imposes First-Ever 10 Percent Redemption Gate on USD 200B FundBanks & Fin··0 mentions
- Portland General Electric 30 Percent Data Center Rate Hike Highlights XLU Capex Return SqueezeEnergy··0 mentions
- SpaceX 75 Billion Dollar IPO on June 12 Would Push S&P 500 Top-10 Weight to 38 PercentEquities US··0 mentions
More about $GSPC
- May 2026 Home Sales Fall Below Year-Ago Levels With Mortgage Rates Anchored Near 7 Percent·Real Estate
- SpaceX USD 75 Billion IPO on June 12 Would Push S&P 500 Top-10 Weight Past 38 Percent·Tech & AI
- Portland General Lifts Data Center Rates 30 Percent but XLU Still Trails SPY by 500 Basis Points·Energy
- XLY and XLI Lag SPY by 500 Basis Points After 10 Percent Tariffs Hit 60 Partners·Equities US
- SpaceX 75 Billion Dollar IPO on June 12 Would Push S&P 500 Top-10 Weight to 38 Percent·Equities US
Top 10 names now over 38% of the S&P 500. What that means for SPY holders, passive flows and tail risk.