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Goldman Sachs on Global Rates: Grouped Hikes, Higher Long-End Yields — 10y UST 4.75%

Posted on by Eben@CANSLIM Research
Eben@CANSLIM Research's avatarEben@CANSLIM Research

Goldman Sachs has raised its end-2026 10-year yield forecasts to 4.75% in the US and 3.25% in Germany, citing a broad-based global bond sell-off driven by term premium, rate expectations, breakeven inflation and higher real rates. The bank expects the Federal Reserve to hike 25bp at next week’s meeting and warns that ongoing curve flattening risk persists unless commodity prices fade. It argues that because fundamentals drove yields higher, fundamentals must shift — via lower commodity prices, weaker growth or tighter policy — to drive them lower again.

Key Takeaways

  • Goldman Sachs raised its year-end 2026 10-year US Treasury yield forecast to 4.75% from 4.40%, and its 2-year forecast to 4.30% from 3.80%.
  • The bank lifted its end-year 10-year Bund yield forecast to 3.25% from 3.00%, noting the Bund has been the worst-performing major 10-year benchmark in the global sell-off.
  • Goldman Sachs economists now expect the Fed to hike 25bp at next week’s meeting, with additional hikes possible but not baseline.
  • Markets are pricing 16bp for the October Bank of Canada meeting and 105bp of tightening by mid-2027, a path Goldman Sachs considers more hawkish than risk-weighted fundamentals justify.
  • Goldman Sachs widened its year-end 10-year spread forecasts to 85bp for OAT-Bunds, 85bp for BTP-Bund and 50bp for Bonos-Bund.

Lead Analysis: What Goldman Sachs’s Global Rates Trader Says

In a report titled “GLOBAL RATES TRADER — Grouped Hikes,” Goldman Sachs Global Investment Research strategists including George Cole, William Marshall, Simon Freycenet, Isabella Rosenberg, Friedrich Schaper and Loic Mathys argue that the defining feature of the recent bond sell-off has been its breadth — global in scope, with no single major market acting as the obvious driver of higher yields. Forwards across both bond and swap curves sit near multi-decade highs in several markets, pressured simultaneously by term premium, rate expectations, breakeven inflation and higher real rates.

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