Goldman Sachs treasury yields outlook has turned more constructive after weeks of extraordinary cross-asset volatility, with the Global Rates team saying the ingredients are falling into place for a steadier global bond market. Falling energy prices and the liquidation of crowded AI positions have pushed G4 ten-year yields 25–50 basis points below their recent highs.
G4 Ten-Year Yields
That move gives bond investors a cleaner setup than the one that followed the latest surge in volatility. The recent drop in G4 ten-year yields is not presented as a one-off swing; Goldman treats it as evidence that the market is moving beyond the latest AI liquidation and into a more stable phase.
The bank’s preferred trades reflect that change. Rather than chase the Treasury rally indiscriminately, Goldman favors the middle of the Treasury curve and also sees an opportunity in inflation-linked bonds.
Treasury and Carry
The carry trade becomes more attractive when rates volatility eases, and Goldman says declining rates volatility should create that kind of environment. That is the practical shift for rate investors: less violent swings make it easier to hold positions that depend on time and yield, not just on sharp directional moves.
Goldman also says falling energy prices are changing the rates outlook across Europe, but the policy picture is not uniform. The implications for central-bank policy are far from uniform, which means the same move in yields will not feed through to every market in the same way.
One part of the market has behaved unusually poorly beneath the Treasury rally, and Goldman’s setup is built for what comes after that stretch. The preferred trades are meant for a market that moves beyond the latest AI liquidation, with the middle of the Treasury curve and inflation-linked bonds doing the heavier work if volatility keeps cooling.
