The bank’s economists cite weaker retail sales, payrolls, and inflation prints as reasons the FOMC will likely hold rates steady.
Goldman Sachs lowered its probability of a Federal Reserve rate hike in September to around 30%, down from earlier expectations, after July’s softer inflation and economic data. The bank’s chief economist, Jan Hatzius, argued that a series of underwhelming releases—including retail sales, payrolls, and inflation—reduces the case for further tightening at the September 15-16 meeting.
Market pricing has shifted accordingly, pushing the next expected Fed move from December to January. The Treasury curve has steepened, reflecting cooling price pressures and fading hike bets, though two-year yields remain above 4%, signaling residual skepticism about the Fed’s dovish pivot.
Goldman’s note, which carries significant weight among traders, suggests the market may still be overestimating future rate hikes. Upcoming FOMC minutes and additional data releases could further influence positioning before the September meeting.