Expected Fed rate cut coming soon? Goldman Sachs and American Express leading the way with rate cuts

The market's expectations for the Fed's interest rate cuts this year are becoming increasingly pessimistic. After the release of better-than-expected non-farm payroll data last Friday, the market believes that the possibility of rate cuts starting in June is decreasing, and some even think that the first rate cut may have to wait until September. However, judging from the actions of two Wall Street giants - Goldman Sachs and American Express, perhaps the market's expectations are overly pessimistic.

Last Wednesday, Goldman Sachs' consumer bank Marcus lowered the interest rate on its high-yield savings account for the first time in over three years, reducing the annual rate on its flagship product to 4.4%, below the 4.5% in March. This is the first rate cut since November 2020 when Goldman Sachs lowered rates from 0.6% to 0.5%.

When asked by the media to explain the reason for the rate cut, a Goldman Sachs spokesperson stated in an email, "Our current rates put us above most of our peers. We will continue to focus on providing value to customers and growing our Marcus deposit business, which is the company's top priority."

Regarding Goldman Sachs' unexpected rate cut mentioned above, analysts point out that only by lowering the interest rate on high-yield savings accounts without causing deposit outflows can the growth of the deposit business be maintained. This means that Goldman Sachs knew that other peers would also follow the Fed's rate cut before this situation could occur. This step usually occurs when they are confident that the Fed will cut rates or shortly after the Fed's decision.

Coincidentally, this week, another financial giant American Express did the same thing, starting from Tuesday, April 9th, lowering the interest rate on its high-yield savings account from 4.35% to 4.30%. American Express also pointed out that this rate is well above the national average in the U.S., allowing depositors to enjoy higher returns.

Financial blog Zerohedge commented that, for "unknown reasons," an obvious dovish trend suddenly swept through the U.S. banking industry. Perhaps the rate cuts by the two giants are not due to "unknown reasons," but because they realize that they can start lowering rates on their products because soon everyone else will do the same for a simple reason: the Fed will kick off an easing cycle.

Media analysis indicates that this move shows that financial institutions are vigilant about when they can lower personal deposit rates. In fact, not just one but two of the largest players in the game have already done so, which should be enough to make the market reassess the Fed's rate cut plan.

It should be noted that despite the collapse of the current market's rate cut expectations, major Wall Street banks such as Goldman Sachs and Citigroup continue to expect the Fed to make its first rate cut in June However, it is clear that the giants have significant differences. Just this week, Jamie Dimon, CEO of Morgan Stanley, warned the market that due to the excessive spending by the US government, inflation and interest rates in the US may continue to be higher than market expectations, preparing for the Fed to raise rates to 8% at most. Dimon also predicted that the likelihood of a soft landing for the US economy is low. Recent geopolitical events are brewing the biggest risks since World War II