Goldman Sachs predicts that the U.S. may cut interest rates in July, and there is still room for market upside

According to the Golden Ten report, Ben Snider, senior strategist of Goldman Sachs's U.S. portfolio strategy team, said that although Goldman Sachs' forecast of a CPI growth rate of about 0.3% is consistent with market consensus, if the actual data is 0.3%, the market should still have room for upside. This depends on the breakdown and PPI data. Because this will support Goldman Sachs’s baseline expectation of an interest rate cut in July, and the market expects that the probability of a rate cut in July is only about 1/4.

The downside risk from hot data is greater than the upside risk from dovish data, as the market has priced in 1.5-2 rate cuts this year and 3 rate cuts next year, as well as strong growth prospects. Even with friendly inflation data, it would be difficult to price in a rate cut by much without an unexpected downside to the growth outlook. Stock markets still appear to be pricing in very strong growth prospects.