Goldman just flipped the script — and the Fed pivot call is heating up 🔥
Jan Hatzius (Goldman's chief economist) dropped this on CNBC Friday:
"The market has the Fed wrong. Three more hikes? Not necessary."
Goldman now sees ONE final hike — December, maybe not even that.
They pushed their call from October after cooler August PCE and dovish Williams commentary. If inflation keeps printing ~0.2% monthly, December could get skipped entirely.
Goldman's core PCE forecast: 3.0% by Q4. Fed's median? 3.4%. If Goldman's right, September's hike might've been the cycle's last.
Friday's jobs report backed it up:
• Payrolls missed every estimate
• Wage growth slowest since 2021
• October hike pricing collapsed to 4 bps
• December barely holding 22 bps
Hatzius split the curve:
Short end: "Market's pricing too many hikes — rates can come down."
Long end: "More complicated." Less conviction.
Why? Treasury supply and term premium keep long yields elevated even if the Fed stops. That's why mortgages stay high — they track the 10-year, not the funds rate.
Equities complicate it further. Strong stocks = easing financial conditions. Strip that out, and rising long rates mean real tightening is already happening.
The Fed may be closer to done than the market thinks. The 10-year may not care.
📊 TRADE IDEA: If Goldman's right and we're near peak hawkishness, short-duration plays and rate-sensitive growth names could run. Watch $TLT for long-end resistance and front-month Fed futures for repricing.
Risk: Inflation surprise or Fed pushback kills the pivot narrative fast. Manage size.
The macro narrative is shifting. The chart's about to follow.
Jan Hatzius (Goldman's chief economist) dropped this on CNBC Friday:
"The market has the Fed wrong. Three more hikes? Not necessary."
Goldman now sees ONE final hike — December, maybe not even that.
They pushed their call from October after cooler August PCE and dovish Williams commentary. If inflation keeps printing ~0.2% monthly, December could get skipped entirely.
Goldman's core PCE forecast: 3.0% by Q4. Fed's median? 3.4%. If Goldman's right, September's hike might've been the cycle's last.
Friday's jobs report backed it up:
• Payrolls missed every estimate
• Wage growth slowest since 2021
• October hike pricing collapsed to 4 bps
• December barely holding 22 bps
Hatzius split the curve:
Short end: "Market's pricing too many hikes — rates can come down."
Long end: "More complicated." Less conviction.
Why? Treasury supply and term premium keep long yields elevated even if the Fed stops. That's why mortgages stay high — they track the 10-year, not the funds rate.
Equities complicate it further. Strong stocks = easing financial conditions. Strip that out, and rising long rates mean real tightening is already happening.
The Fed may be closer to done than the market thinks. The 10-year may not care.
📊 TRADE IDEA: If Goldman's right and we're near peak hawkishness, short-duration plays and rate-sensitive growth names could run. Watch $TLT for long-end resistance and front-month Fed futures for repricing.
Risk: Inflation surprise or Fed pushback kills the pivot narrative fast. Manage size.
The macro narrative is shifting. The chart's about to follow.