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- Fed rate hike odds are falling as Goldman Sachs expects inflation to keep improving.
- Bitcoin price rose above $63,000 as Treasury yields and the US dollar weakened.
- FOMC minutes and upcoming economic data could determine whether the dovish shift continues.
Markets are dialing back expectations for another Federal Reserve rate increase as weaker economic data and cooling inflation shift the policy outlook. Goldman Sachs now considers a September rate hike highly unlikely, arguing that investors remain too aggressive in pricing a hawkish Fed.
The change in expectations has already lifted risk assets. US stock futures are gaining, while Bitcoin price has climbed above $63,000 as Treasury yields and the US dollar retreat.
Goldman Sachs Sees Little Case for a September Hike
Goldman Sachs chief economist Jan Hatzius said recent data point toward continued improvement in inflation rather than a renewed acceleration in price pressures. Softer retail sales, weaker labor-market conditions and easing inflation have reduced the case for higher interest rates.
The bank expects the Federal Reserve to keep its benchmark rate between 3.50% and 3.75% through the end of 2026. Under that forecast, rate cuts would not arrive until 2027.
Market expectations have also shifted. CME FedWatch data cited in the provided context puts the probability of a 25-basis-point increase in September at about 30%, while the odds of the Fed holding steady are close to 70%.
Prediction markets are similarly cautious, with Polymarket showing a modest advantage for bets that the Fed will not raise rates at least once during 2026.
Treasury Yields and Dollar Weakness Support Bitcoin
The reduction in rate-hike expectations is easing pressure on financial markets. The two-year Treasury yield has moved toward 4.12%, while the 10-year yield has fallen to about 4.676%.
The US Dollar Index has also declined, falling 0.31% to 99.36. A softer dollar and lower yields can improve the appeal of riskier assets, including cryptocurrencies.
Bitcoin responded with a gain of more than 1%, reaching $63,503. The cryptocurrency traded between $62,666 and $63,641, while 24-hour trading volume rose more than 47%.
FOMC Minutes Could Shape the Next Move
Investors now have another important catalyst to watch: the Federal Open Market Committee minutes. The release could provide additional clues about how policymakers view inflation, employment and the possibility of future rate changes.
For Bitcoin and broader markets, the key issue is whether the recent cooling in inflation continues. If it does, expectations for tighter monetary policy could weaken further. However, stronger inflation or labor-market data could quickly revive hawkish bets.
Also Read: Goldman Sachs Makes $2.25B Crypto Move as Hoskinson Warns CLARITY Act May Fail
The latest shift in Fed rate hike odds is giving stocks and Bitcoin room to recover, but the outlook remains dependent on incoming economic data. Goldman Sachs believes markets are still pricing too much policy tightening, while traders are increasingly betting on a prolonged Fed pause. The next inflation, employment and FOMC updates will determine whether that view gains further traction.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
