"They're Not Hiking": Goldman Says Soft Consumption & Better Inflation Took September Off The Table

Despite a significant slide last week, markets are still running with a September hike as a live event (30% - not 'off the table'). VIX is at a 14-handle, the tape is risk-on, and bonds (especially the long-end) are being sold.

But, Goldman Sachs chief economist Jan Hatzius delivered a clear message to markets still clinging to residual hike expectations: the data have turned soft enough, and the temporary inflation drivers are fading fast enough, that the Fed is not hiking (full note available here for pro subs).

The Fed implication is straightforward.