Goldman Sachs cuts US recession odds to 15%

Goldman Sachs has lowered the likelihood of a US recession in the next 12 months from 20 per cent to 15 per cent after a strong September jobs report.

US job gains hit a six-month high, and unemployment fell to 4.1 per cent. Chief economist Jan Hatzius noted the report has eased concerns about weakening labour demand.

Moreover, Goldman Sachs still expects two 25-basis-point rate cuts, aiming for a terminal rate of 3.25-3.5 per cent by mid-2025, and sees a lower risk of a 50-bps cut. Markets increased the odds of a November rate reduction to 95.2 per cent.

Despite potential disruptions in October from a hurricane and a strike, the brokerage sees no signs of persistent negative revisions in job data.

Attribution: Reuters

Subediting: M. S. Salama