Goldman Sachs says markets remain too aggressive on Fed rate-hike expectations
as US inflation cools. Chief economist Jan Hatzius wrote that weak retail sales,
Disappointing jobs and slowing inflation make a September Fed hike "extremely
unlikely." He added that on Goldman’s baseline, inflation is more likely to
improve than worsen and market pricing of the federal funds rate remains too
hawkish. Markets have pushed the next 25bp hike out to January next year after
fully pricing a December move a week ago. Goldman sees further scope for easing
of hike expectations.
