The Federal Reserve will only start cutting interest rates in September, according to economists at Goldman Sachs Group Inc., who pushed back their call from July amid signs the economy is still too resilient to justify easing.

“Earlier this week, we noted that comments from Fed officials suggested that a July cut would likely require not just better inflation numbers but also meaningful signs of softness in the activity or labor market data,” economists including Jan Hatzius wrote in a note.

Goldman Sachs had been one of the last banks on Wall Street betting the Fed would start lowering interest rates in July. Their u-turn comes as the market becomes increasingly convinced that policymakers will take a cautious approach in easing policy given how resilient the US economy remains.

Treasuries edged lower after data showed durable goods orders in the US rose more than expected in April, dashing hopes of a swift easing cycle further. The yield on 10-year notes was one basis point higher at 4.48%, near the highest level in more than a week. The University of Michigan consumer sentiment gauge, due later Friday, will give investors an added insight into the state of the economy.

Earlier this week, Nomura Securities also pushed their call from July to September, saying “the threshold for rate cuts appears to have risen.” Goldman Sachs Chief Executive Officer David Solomon is even more hawkish than his economists, saying that he doesn’t expect any cuts this year.

The first interest-rate cut from the Fed is now only fully priced by December, according to pricing in the swap market. The odds of a second reduction stand at less than 30%, compared with about 70% last week. At the end of 2023, the first Fed cut was expected as early as March.

On Thursday, data showed US business activity accelerated in early May at the fastest pace in two years. Federal Reserve Bank of Atlanta President Raphael Bostic later that day said monetary policy has been less effective in slowing growth than in previous cycles, reinforcing the need to keep rates higher for longer to curb inflation.

US Treasuries are heading for their first weekly loss this month. The yield on 10-year securities is just below the pivotal 4.50% that has lured buyers, and some 60 basis points higher compared to the start of the year.

Goldman Sachs still expects the Fed to deliver two cuts in total through 2024, with one per quarter, or every other meeting. That means the second reduction would now come in December, according its economists.

JPMorgan Chase & Co. and Citigroup Inc. are among the few holdouts still forecasting a July move.

This article was provided by Bloomberg News.