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Goldman: Strong Data Raises Yield Floor Into Year-End


Goldman Sachs write “despite a geopolitical risk overhang, yields rose again this week following strong economic data - most notably, a strong beat in September retail sales. While the possibility remains that the combination of factors could still result in a meaningful growth slowdown in Q4, the risk is that these headwinds turn out to be smaller than expected.”

  • "In this scenario, investors will be less likely to refocus their attention on the left tail, presenting upside risks to our current YE23 10y yield forecast of 4.25%.”
  • “Although recent data raise the likelihood of a higher near-term floor for yields, we continue to believe yields are unlikely to rise much further on a sustainable basis.”
  • “Our previous study, based on the average magnitude of similarly sharp selloffs, suggested that the current range reset may top out around 4.8%. Having exceeded that level, we believe the move up could face its next challenge around 5.1-5.25%, roughly the yields investors would earn on money market accounts or T-bills.”
  • “While we think current yield levels already make a compelling medium-term case for owning bonds, the value will be harder to ignore when yields no longer trade at a clear discount to cash alternatives.”
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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