just ahead of wednesday’s widely anticipated us consumerprice index report for july a pair of goldman sachs analysts are warning the us’s nearterm inflation picture “is likely to remain uncomfortably high” and that financial markets are “more vulnerable” to upside surprises than before  the reason is that for the past month or so markets have been preoccupied with a scenario in which federal reserve policy makers can ultimately revert back to easier policy or give up on aggressive rate hikes on the presumption that inflation has peaked that sentiment is reflected in nominal and real yields that have fallen nearly 100 basis and 85 basis points respectively from june to the start of august analysts dominic wilson and vickie chang wrote in a note monday and it’s also demonstrated in goldman sach’s own us financial conditions index which has eased by 70 basis points from its peak they said  meanwhile however measures of inflation’s “breadth” have generally been rising and goldman sachs gs expects price gains to stay elevated in the next few months and likely through the end of the year indeed some of the financial market’s brightest minds on inflation have been expecting a string of roughly 88 annual headline cpi readings starting on wednesday for the next three months even after factoring in recent declines in gas and commodity prices   “our central view has been that it is too early for the market to be trading a full fed pivot” wilson and chang wrote in addition “the market has worried too much about imminent recession” and “the more the growth outlook improves the more the fed will need to make sure financial conditions stay tight”  “the nearterm inflation picture is likely to remain uncomfortably high” they said while there should be relative relief in headline inflation and in core goods prices in the next few months “core services prices are likely to rise further on a yearoveryear basis and stay firmer on a sequential basis too in part because of ongoing firmness in shelter inflation”  wilson and chang aren’t alone in their views lindsey piegza chief economist at stifel nicolaus  co said that while wednesday’s annual headline cpi rate may reflect a “welcome reprieve” from a 91 rate in june the data “may prove underwhelming” and one month’s minimal decline “should not have a material impact on the federal open market committee’s latest hawkish rhetoric or plans to move forward with a potential thirdround 75bp hike in september”   the fed has raised the target on its main policy rate to a range of between 225 and 25 since march up from between zero and 025 earlier this year now fed funds futures traders see a 655 chance of a 75 basis point hike in september and 345 likelihood of a smaller 50basispoint move they see a 709 chance the fed funds rate target gets to at least between 35 and 375 by next march before the fed cuts rates later in 2023 according to the cme fedwatch tool    on tuesday as traders settled into waitandsee mode ahead of the july cpi report all three major stock indexes djia spx comp were lower in morning trading meanwhile treasury yields popped higher across the board on governmentbond selling sending the 2year rate tmubmusd02y up to 326 and the 10year rate tmubmusd10y up to almost 28