Goldman Derivatives Desk: Everyone Is Buying Calls, Nobody Wants Puts (So Buy Gold)

It is the last week of summer and on the surface things seem quiet, with traders desperately trying to catch one last week of vacation peace; but it's hardly quiet under the hood according to Goldman derivatives guru Brian Garrett, who shares his latest observations from a week "light on green-dot attendance, but heavy on catalysts" (full note available to pro subscribers):

1. Warsh was hawkish (GS note): inflation is still too high and it remains the predominant focus for the fed… Goldman continues to expect the FOMC to remain on hold but acknowledges the market’s pricing of a September hike at ~60% as reasonably founded (although Bloomberg expects a second consecutive negative jobs print in a row, and reminds readers that the Fed has never hiked rates after two negative NFP reports). Worse: while many thought a hawkish Jackson hole could bring longer end yields lower given increase in perceived fed credibility/independence, the opposite happened (10y 4bps higher on the session, and now 25bps higher on the quarter).