Goldman Sachs: US Treasury Can Lower Long-End Yields by 20-40bp, but Hard to Change Final Direction

On August 21, Goldman Sachs MarketStrats believes that the US Treasury, by expanding long-term Treasury buybacks, does have the ability to alleviate long-end pressure in stages. Referencing the 1961 Operation Twist and the 2011 maturity extension program, such tools historically brought about a 10-20bp decline in long-end rates; Goldman judges that this round, through buybacks, adjusting issuance maturities, and balance sheet management, a staged 20-40bp decline in long-end yields is also achievable.

However, Goldman remains cautious on long-term effects: the current rise in long-end rates is not merely a technical supply-demand mismatch but is also driven by persistent fiscal deficits, inflation uncertainty, and a higher equilibrium real rate center. The report notes that AI capital expenditure, data center construction, power infrastructure, and reindustrialization are also raising overall societal capital demand; Treasury buybacks can ease short-term duration supply but are unlikely to change the upward trend in the long-term rate center.

[BlockBeats]