Short-term interest rate futures are priced for the Fed to cut rates by about 150 basis points from September 2023 to September 2024. However, two big banks, Goldman Sachs and TD Securities, have mixed views on the prospect of the Fed cutting interest rates. TD Securities doesn't think such rate cuts are enough, while Goldman Sachs thinks it's too much.
Strategists at the two big banks have therefore given different trading recommendations. Goldman Sachs strategists on Friday advised investors to brace for smaller rate cuts between September 2023 and September 2024. Goldman Sachs strategists including Praveen Korapaty believe investors have already priced in too much rate cut expectations and need to think twice about rebounding economic activity data and still-high inflation data.
A day earlier, analysts at TD Securities had advised investors to bet on a bigger rate cut. TD Securities expects the Fed to cut rates by 275 basis points from December 2023 to September 2024.
