The bank downplays labor market data, citing structural Treasury supply and AI-driven debt as key drivers of long-term yields.
Goldman Sachs said last week’s in-line CPI print, with core CPI up 21.5 basis points, triggered a modest bond rally and eased pricing for the Fed’s September meeting. Cooler-than-expected PPI data later pushed the S&P 500 to a record closing high on Thursday.
The bank noted that structural factors, including heavy Treasury issuance and record corporate debt tied to AI infrastructure, continue to pressure long-term yields. These dynamics are expected to persist regardless of near-term data surprises, overshadowing softer employment figures.
Goldman’s base case remains a curve steepener, reflecting fair value at the front end against ongoing long-end pressure, with a recession scenario not currently favored. Inflation retains primacy in the Fed’s policy calculus, the bank said.