Goldman Sachs cut its recession forecast for the US to 35 per cent from 45 per cent, the first major brokerage to do so, after a temporary tariff truce with China boosted hopes of some easing in the global trade war.

On Monday, the US and China agreed to reduce tariffs on each other’s imports for 90 days, with the US lowering its tariffs on Chinese goods to 30 per cent from 145 per cent and China cutting duties on US imports to 10 per cent from 125 per cent.

Global brokerages had raised their odds of a US and global recession last month as tariff concerns threatened to weaken business confidence and slow growth.

Goldman also hiked its 2025 US GDP growth forecast by 0.5 percentage points to 1 per cent, it said in a note on Monday.

With the growth outlook potentially improving, Goldman now expects a total of three rate cuts from the Federal Reserve in 2025 and 2026. It sees one reduction in December instead of July and the remaining in March and June next year.

The brokerage had earlier predicted three rate cuts for this year itself.

“The rationale for rate cuts shifts from insurance to normalization as growth remains somewhat firmer, the unemployment rate rises by somewhat less, and the urgency for policy support is reduced,” Goldman said.

Goldman Sachs additionally raised the year-end target for the S&P 500 index (.SPX) to 6,100 points from 5,900, citing lower tariff and recession risks, according to a separate note.

The index closed at 5,844.19 points on Monday.

Citigroup, meanwhile, pushed its expectations for a Fed rate cut to July from June, it said on Monday.