🇪🇸 Goldman Sachs: Heavy Treasury Supply and AI Debt Are Pushing Long-Term Bond Yields Higher
• August core CPI came in right down the middle (+0.215% m/m), with a softer read-through to the Fed's preferred PCE gauge — markets now price just 9bps of cuts for the September Fed meeting.
• Last week's jobs report showed negative payroll growth for the first time in months, but Goldman's Mike Mitchell says the labor market "is not the story" — it's all about inflation data.
• A 10-year Treasury auction this week was the highest-yielding since 2007, as heavy government supply and rising fiscal deficits keep pushing up the term premium on longer bonds.
• AI-driven corporate debt issuance could hit $250B in 2026 and $400B in 2027, adding further pressure on long-end yields on top of Treasury supply.
• 10-year TIPS real yields near 2.5% (20-year near 3%) are the most attractive since before the 2008 financial crisis; Goldman's preferred trade is a curve steepener.
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