{"id":62816,"date":"2026-06-07T23:38:25","date_gmt":"2026-06-08T03:38:25","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/global-markets-shaken-as-goldman-sachs-delays-fed-cuts-to-2027-amid-middle-east-escalation\/62816\/"},"modified":"2026-06-07T23:38:25","modified_gmt":"2026-06-08T03:38:25","slug":"global-markets-shaken-as-goldman-sachs-delays-fed-cuts-to-2027-amid-middle-east-escalation","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/global-markets-shaken-as-goldman-sachs-delays-fed-cuts-to-2027-amid-middle-east-escalation\/62816\/","title":{"rendered":"Global Markets Shaken as Goldman Sachs Delays Fed Cuts to 2027 Amid Middle East Escalation"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>Goldman Sachs (<a href=\"\/stock\/GS\">GS<\/a>) has officially abandoned its 2026 rate cut forecast<\/strong>, now predicting the first Federal Reserve reduction will not occur until <strong>June 2027<\/strong> due to a resilient labor market and sticky inflation.<\/li>\n<li><strong>Middle East tensions reached a new peak<\/strong> as the Israel Defense Forces (IDF) intercepted a missile fired from Yemen targeting central Israel, following overnight Israeli strikes on military targets in Iran.<\/li>\n<li><strong>Asian central banks have entered &quot;emergency mode&quot;<\/strong> to stabilize currencies; the <strong>Indonesian Rupiah breached 18,000 per dollar<\/strong> while the <strong>South Korean Won hit a 17-year low<\/strong> of 1,555.<\/li>\n<li><strong>Fitch Ratings slashed its 2026 global growth forecast to 2.4%<\/strong>, warning that a prolonged oil price shock and the 14-week closure of the Strait of Hormuz are deepening credit stress across the Asia-Pacific region.<\/li>\n<\/ul>\n<h2>Fed &quot;Higher for Longer&quot; Narrative Intensifies<\/h2>\n<p>In a major recalibration of global monetary expectations, Goldman Sachs (<a href=\"\/stock\/GS\">GS<\/a>) announced it no longer expects the Federal Reserve to deliver any interest rate cuts in 2026. Chief Economist David Mericle pushed back the projected timeline for the first two 25-basis-point cuts to <strong>June and December 2027<\/strong>, citing a &quot;blowout&quot; May employment report and robust investment in artificial intelligence.<\/p>\n<p>The bank also raised the probability of a <strong>near-term Fed rate hike to 20%<\/strong>, up from 10%, as policymakers grapple with energy-driven inflation. This hawkish shift comes just ahead of the debut FOMC meeting for newly confirmed Fed Chair Kevin Warsh, scheduled for mid-June.<\/p>\n<h2>Middle East Conflict Triggers Global Flight to Safety<\/h2>\n<p>Geopolitical risks surged on Monday after the <strong>IDF detected and intercepted a missile fired from Yemen<\/strong> toward Israeli territory, triggering sirens in Tel Aviv and Jerusalem. The attack followed a significant escalation overnight in which Israel conducted strikes against military targets in western and central Iran, including Tehran and Isfahan.<\/p>\n<p>Fitch Ratings warned that the ongoing conflict has created a severe <strong>oil price shock<\/strong>, with Brent crude assumptions revised upward to <strong>$87 per barrel<\/strong>. The agency noted that the 14-week disruption of the Strait of Hormuz is hitting downstream chemicals and oil sectors particularly hard, raising the specter of widespread credit downgrades across Asia.<\/p>\n<h2>Asian Markets and Currencies Under Siege<\/h2>\n<p>The &quot;higher for longer&quot; U.S. rate outlook combined with regional instability has sent Asian markets into a tailspin. <strong>Indonesian 10-year government bond yields climbed sharply to 7.142%<\/strong>, while the Rupiah\u2019s fall past the <strong>18,000 per dollar<\/strong> mark forced Bank Indonesia to ramp up interventions across spot and non-deliverable forward (NDF) markets.<\/p>\n<p>In Seoul, the <strong>South Korean Won plummeted to 1,555.2 per dollar<\/strong>, its weakest level since the 2009 global financial crisis. Financial authorities issued a stern warning against &quot;speculative herd behavior&quot; and &quot;one-way bets,&quot; while the Korea Exchange convened an emergency meeting to address a deepening rout in tech stocks like Samsung Electronics (<a href=\"\/stock\/SSNLF\">SSNLF<\/a>) and SK Hynix (<a href=\"\/stock\/HXSCL\">HXSCL<\/a>).<\/p>\n<h2>Regional Developments and Macro Risks<\/h2>\n<p>Despite a recent growth miss, <strong>Japan\u2019s hopes for a rate hike remain intact<\/strong> as the Bank of Japan monitors the yen\u2019s weakness against a surging U.S. dollar. Meanwhile, the Singapore Dollar continues to consolidate but faces significant downside risks as traders price in the Fed\u2019s prolonged pause.<\/p>\n<p>In North America, the National Hurricane Center warned that a depression is likely to intensify into a <strong>tropical storm<\/strong>, bringing severe flood risks to Southern Mexico through Monday night. Separately, Saudi Arabian authorities have activated an early warning system in <strong>Al-Kharj<\/strong> as a precautionary measure amid the widening regional conflict.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Goldman Sachs (GS) has officially abandoned its 2026 rate cut forecast, now predicting the first Federal Reserve reduction 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