Wall Street collectively "tears up reports", following Goldman Sachs, Bank of America, and Barclays also change their stance to "rate cut in May"

After Federal Reserve Chairman Powell's speech on January 31st, the last batch of Wall Street institutions, including Goldman Sachs, Bank of America, and Barclays, which had insisted on the earliest rate cut by the Federal Reserve in March, also delayed their predictions for the timing of the rate cut.

In the latest report, Goldman Sachs analysts, including Jan Hatzius, have pushed back their expectation for the first rate cut by the Federal Reserve from March to May. However, consistent with their previous prediction, Goldman Sachs still forecasts that the FOMC will cut rates five times in 2024. Barclays Bank also expects the Federal Reserve to make its first rate cut in May instead of March.

Bank of America, on the other hand, has pushed back the timing of the first rate cut by the Federal Reserve to June, and predicts that the Federal Reserve will cut rates three times by 25 basis points this year and another 100 basis points next year. However, they added that "May is also on the table," and they have also pushed back their expectation for the Federal Reserve's announcement of balance sheet reduction from March to May.

Bank of America's team, including Michael Gapen and Mark Cabana, wrote in a report released after the Federal Reserve policy meeting, "The Fed Chair essentially ruled out the possibility of a rate cut in March twice in the same response, so we have to accept this signal."

Bank of America commented that whether it is from the Federal Reserve's revised meeting statement or Powell's remarks at the post-meeting press conference, it can be seen that the Federal Reserve is preparing for a rate cut but does not want the market to get too far ahead, so it is continuously "pouring cold water" on the expectations of a rate cut in March.

Bank of America pointed out that the market is now using rate cuts to express different opinions on the Federal Reserve's decisions, telling the Federal Reserve that their policy path "went wrong." The market believes that the Federal Reserve missed the opportunity to cut rates in March, so the Federal Reserve's rate cut strategy will become "later but faster."

Swap traders are also increasing their bets on a rate cut in May, and have already priced in a rate cut of over 50 basis points in June, 7 basis points higher than Tuesday.

For other banks such as JPMorgan Chase and Deutsche Bank, Powell's speech and the Federal Reserve's statement have strengthened their confidence in a rate cut in the second quarter, but also prompted them to believe that there is a possibility of action by the Federal Reserve at the meeting on April 30th to May 1st.

JPMorgan Chase economist Michael Feroli wrote in a report on Wednesday, "We stick to our view of the first rate cut in June, but after Powell's speech, it is not difficult to see that the combination of employment and inflation data could prompt the committee to cut rates in May." The team led by Liu Gang from CICC believes that whether the interest rate cut will happen in March or May, the difference in terms of assets may not be significant. As long as the direction is clear, the trading direction will also be clear. There may be some "reversals" in the process, but it is just a temporary setback.