Markets' hopes for Fed interest rate cuts are rapidly fading away
Why it matters: Delayed cuts could pressure equities and bonds, reshaping portfolio risk.
- CME Group FedWatch now prices only a December cut, with any further reductions pushed out to 2027‑2028, after the June cut expectation vanished.
- Goldman Sachs pushed its forecast back to September, citing higher inflation from oil, but still leaves room for a second cut before 2026 if the labor market weakens.
- Fedaders in fed‑funds futures have removed the September cut altogether, reflecting heightened inflation risk after the U.S‑Israel‑Iran conflict and Brent crude breaching $100.
- President Trump publicly demanded immediate cuts, labeling Powell “Too Late,” underscoring political pressure despite data‑driven market caution.
Geopolitical tensions and soaring oil prices have wiped out expectations for an early Fed rate cut, shifting the market’s first‑trim outlook to September or later as inflation remains stubborn.
