Goldman Sachs Shifts Fed Cut Forecast to 2027 After 172,000 May Jobs Gain
GS•Goldman Sachs economists have scrapped their forecast for a December 2026 Fed rate cut and now expect two quarter-point cuts in June and December 2027 after US nonfarm payrolls rose by 172,000 in May and unemployment held at 4.3%. President Trump’s public opposition to rate increases ahead of Kevin Warsh’s first Fed meeting adds political risk that could sway bond trading and advisory revenues.
1. Goldman Sachs Revises Fed Cut Outlook
Goldman Sachs economists have abandoned their prior projection for a Federal Reserve rate cut in December 2026 and now anticipate two quarter-point cuts in June and December 2027. This shift reflects stronger US labor data and a reassessment of inflationary pressures that could extend a higher-for-longer rate environment, influencing the bank’s fixed-income and investment strategies.
2. Strong May Jobs Report Sparks Yield Surge
The US Bureau of Labor Statistics reported a 172,000 increase in nonfarm payrolls for May and a steady 4.3% unemployment rate. These figures prompted a selloff in Treasuries, drove benchmark yields higher and led markets to fully price in a potential rate hike, impacting Goldman Sachs’s bond trading volumes and risk models.
3. Trump’s Rate-Hike Opposition Adds Political Pressure
President Trump publicly stated that raising rates would be “the wrong thing to do” ahead of Kevin Warsh’s first Fed policy meeting on June 16–17. His comments inject political uncertainty into the Fed’s decision-making process, potentially increasing volatility in interest-rate markets and affecting Goldman Sachs’s advisory and trading desks.
