๐ช๐ธ Goldman Sachs: Heavy Treasury Supply and AI Debt Are Pushing Long-Term Bond Yields Higher
โข 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 โ markets now price just 9bps of cuts for the September Fed meeting.
โข 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" โ it's all about inflation data.
โข 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.
โข 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.
โข 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.
๐ Read more
#goldmansachs