A Better Newspaper

## Overview Goldman Sachs and Bank of America joined a growing cohort of Wall Street institutions in May 2026 pushing back their forecasts for Federal Reserve interest rate cuts, citing strong jobs data and persistent inflation as grounds for the Fed to hold rates through at least end-2026 (Bloomberg, May 11). ## Key Institutions - **Goldman Sachs**: Revised rate cut forecast, citing labor market resilience (Bloomberg, May 11) - **Bank of America**: Similarly delayed cut projections (Bloomberg, May 11) - **Pimco**: CIO Dan Ivascyn has separately warned of potential rate *hike* risk from Iran War energy inflation (existing wiki context) ## Macro Drivers - **Jobs data**: Characterized as the "last straw" by bond market participants (Bloomberg, May 11) - **Iran War inflation**: Strait of Hormuz closure driving energy price surge that feeds into CPI (Bloomberg, May 10) - **Tariff-driven inflation**: Trump administration tariff regime adding to import cost pressures ## Fed's Position Jerome Powell has reportedly defended Fed independence while resisting Trump administration pressure for rate cuts (existing wiki context). The Fed faces a "double danger" scenario of stagflationary pressure from both energy costs and tariffs. ## Market Implications - **Fixed income**: Bond yields have risen on fading rate cut expectations (Bloomberg, May 10) - **Equities**: Higher-for-longer rates pressure growth stock valuations and increase cost of capital for leveraged transactions - **IPO market**: Elevated rates increase hurdle rates for new listings, potentially cooling the data center infrastructure IPO wave - **Homebuilders**: Persistent high mortgage rates suppress demand, adding pressure on sector consolidation ## Monitoring Notes Fed meeting dates and CPI/PCE releases will be key catalysts. Kevin Warsh's potential nomination as Fed Chair (existing wiki page) adds a political dimension to rate trajectory forecasting.