Goldman Sachs Flips to a Rate Hike as Bitcoin's Price Stalls Under $80,000

Key Takeaways

• Goldman Sachs moved from a hold call to a 25-basis-point hike for Sept. 16 after August core CPI hit 0.3%.
• CME Fedwatch odds for a September increase climbed from roughly 69% to 86.5% within hours of the data.
• Bitcoin’s 50-day average crossed above its 200-day line on Sept. 11, then slipped back under the same day.

The Reversal

As recently as July 31, Goldman Sachs was the loudest institutional voice arguing the Fed would sit still. The bank expected rates to stay unchanged for the remainder of the year, reading Chair Kevin Warsh’s remarks as less hawkish than the dissent count implied and betting that monthly core inflation would soften enough for officials to tolerate above-target annual readings.

That call, however, is gone as researchers for the bank, led by chief U.S. economist David Mericle, now expect the Federal Open Market Committee (FOMC) to deliver a quarter-point increase when its two-day meeting concludes on Sept. 16, lifting the federal funds target from its current 3.50% to 3.75% range.

Goldman is not alone in this, given JPMorgan, Citigroup, Mitsubishi UFJ and TD Securities have all landed on the same side.

Infact, the Wall Street Journal went further, reporting that investors have all but concluded the Fed will raise rates next week for the first time in three years, with attention already moving past the decision itself and onto what follows.