Goldman Sachs: September Rate Hike Priced In Hawkish, US Stocks Under Pressure from Interest Rate Outlook Flip-Flopping

BlockBeats News, August 20th – Goldman Sachs Chief Economist Jan Hatzius believes that the market's pricing for a September FOMC rate hike still tilts hawkish. The bank assesses that unless there is a significant reversal in the August data to be released in early September, the likelihood of the Fed raising rates at the September 15-16 meeting is now "quite low." Reasons given by Goldman Sachs include: a notable slowdown in job growth, cooling consumer momentum, and a more likely continuation of the improvement trend in inflation.

From Goldman's perspective, recent data is weakening the case for a rate hike. U.S. July potential job growth is said to be only about 5,000 people, below the level needed to maintain labor market balance; retail sales are weakening, indicating that consumer growth in the second half of the year may slow to 1% to 1.5%; and core PCE inflation is still expected to gradually decline, approaching the 2% target in 2027. Hatzius believes that after two consecutive months of soft employment and inflation data, the threshold for dovish-leaning members to pivot towards supporting a rate hike will be very high.

However, the Fed's meeting minutes have brought new turmoil to the market. The July minutes released in the early morning of August 20th Beijing time showed an increase in officials supporting further policy tightening compared to June, with several officials believing that if inflation does not continue to cool down, higher rates may still be necessary in the future. This makes it difficult for the market to directly bet on a "Goldman-style dovish interpretation," and short-term rates and tech stock valuations will continue to be impacted by policy expectations.