Goldman Sachs warns that the US Treasury's bond buyback program is only a short-term first-aid measure, and the only sustainable way to push down the 30-year US Treasury yield, which has surged to 5.25 percent, the highest since 2007, is continued signs of slowing inflation. Strategist Friedrich Schaper says the root of the problem is not liquidity, but investors' structural concerns about record-high public debt burdens, the risk of accelerating inflation, and competition for capital from corporate bond issuance. If inflation eases, it would reduce worries about purchasing power and open the door for the Fed to end rate hikes or cut rates in the future, which would directly support the bond market. Recent data favorable to the bond market include weaker-than-expected US retail sales, slowing employment figures, and July core inflation that was not as hot as feared.
Goldman Sachs Group IncGoldman Sachs strategist comments on bond yields and inflation, but no direct impact on Goldman's own business.
Article discusses high 30-year Treasury yield and suggests only slowing inflation can sustainably lower it, implying yields may stay elevated.
