Goldman Sachs Now Expects a Quarter-Point Fed Increase as Oil Adds a Second Inflation Impulse

Goldman Sachs switched to forecasting a 25 basis point increase at the Federal Reserve meeting after August consumer price data left annual inflation at 3.4%, with futures pricing the move at 87%. CoinDesk reported that Goldman was the last of the major banks to withdraw its no-hike call, and quoted an economist who argues the increase answers financial conditions and asset prices rather than the inflation data itself. Both readings point in the same direction for funding costs.

A separate energy shock added a second inflationary pressure. Saudi Arabia shut its East-West crude pipeline after drone attacks launched from Iraq, and Brent traded 3.1% higher at $107.87, close to $108. The line carries up to about seven million barrels a day to the Red Sea and is the route that avoids the Strait of Hormuz, so its closure removes the alternative that made Gulf supply look resilient during the current United States-Iran confrontation. Riyadh has not said how badly the pipeline is damaged or when it reopens.

Digital assets are priced off the same funding cycle. Bitcoin traded near $77,636 and Ether near $2,514 early on Monday according to the Goku Crypto News market post, which put Bitcoin dominance at 59%. Total value locked in decentralized finance stands at $88.55 billion, of which Ethereum holds $50.02 billion, and layer-2 networks secure $48.98 billion, with Arbitrum One down 3.5% over seven days and Base up 1.4%.

The combination matters more than either part alone. A central bank tightening into an oil supply shock compresses the multiple on long-duration and leveraged assets at the same time that it raises the cost of the dollar borrowing that funds crypto carry trades. Treasury companies holding Bitcoin against preferred and convertible funding are exposed to that channel first, before spot holders are.