Goldman Sachs Lowers US Treasury Yield Forecast as Odds of Earlier Fed Rate Cut Rise

According to ChainCatcher, Goldman Sachs has revised down its forecast for U.S. Treasury yields, noting an increased likelihood that the Federal Reserve will cut interest rates earlier than previously expected. In a report dated July 3, strategists including George Cole wrote that they now expect the yields on two-year and ten-year U.S. Treasuries to fall to 3.45% and 4.20%, respectively, compared to their previous year-end forecasts of 3.85% and 4.50% for these two benchmark yields.

Prior to this, Goldman Sachs economists had revised their expectations for Fed rate cuts this year. The latest forecast from Goldman’s economics team came before the U.S. released strong employment data on Thursday, which eased some pressure on the Fed. However, Goldman’s rates strategists remained cautious, pointing out that the significant contribution from government hiring and a slight decline in the labor force participation rate diminished the strength of the data.