Investors are in for a rude awakening in just a few weeks, according to Jan Hatzius, Chief Economist with Goldman Sachs.

He told CNBC Friday that the most likely move for Janet Yellen and the Fed to make following their two-day meeting that concludes on September 21 is to raise rates. That’s in stark contrast with what Fed funds futures markets are indicating about investor expectations. According to the CME group, futures traders are putting just an 18% probability that the Fed will raise rates later this month.

Hatzius said that Friday’s jobs report—showing the American economy created a less-than-expected 151,000 new jobs—was far more positive for the economy than many have perceived. “It was a little below expectations, but for us, it’s just enough to make it a little more likely than not that they do go in September,” Hatzius told the network.

Goldman now says there is a 55% chance that the Fed will raise rates in September, up from a 40% chance it had been predicting before Friday’s jobs numbers. And that prediction was raised from earlier this summer, when Hatzius was placing a 35% chance of a rate hike in September.

But since Friday, markets have moved in the opposite direction of Hatzius’ forecast. Before the weekend, traders were indicating they thought there was a 21% chance that Yellen would hike this month.

 

 

But it’s possible the Fed funds market is understating the possibility of a rate hike as well. “While most traders of Fed Funds futures are highly sophisticated, it is important to recognize they can be, and often are, wrong,” says Carley Garner, a futures and options broker with DeCarley Trading.

Even so, according to Jim O’Sullivan, Chief U.S. Economist with High Frequency Economics, Fed officials will be wary of moving “without a somewhat higher probability of moving priced in [to fed funds futures markets] first.”

He writes in a note Tuesday to clients that if the Fed really is intent on raising rates later this month, it’s likely that Fed officials will take to using public statements to broadcast their hawkishness. But since the Fed tends to stick to a standard “blackout” period without public statements from officials for a week before its meetings, that means that any signal will have to come between now and midnight on Monday, September 12.

So if you, like Hatzius, believe the Fed should and will raise rates next month, expect Fed officials to start taking to the podiums and airwaves in force this week to try to convince markets they mean business. So far investors aren’t convinced.