Goldman Sachs lowers its forecast for U.S. Treasury yields due to the increasing possibility of an early interest rate cut by The Federal Reserve (FED)

According to Mars Finance, Goldman Sachs has lowered its forecast for U.S. Treasury yields, indicating that the possibility of the Federal Reserve (FED) cutting interest rates earlier than previously expected has increased. Strategists including George Cole wrote in a report on July 3 that they expect the yields on two-year and ten-year U.S. Treasuries to drop to 3.45% and 4.20%, respectively, down from previous expectations of 3.85% and 4.50% for these benchmark yields by year-end. Prior to this, Goldman Sachs economists revised their expectations for the FED's interest rate cuts within the year. Before the latest predictions from Goldman Sachs' economic team were released, the U.S. published strong employment data on Thursday, easing pressure on the FED. However, Goldman Sachs' interest rate strategists remained undeterred, noting that the significant contribution from government hiring and the slight decline in labor participation rate weakened the strength of the data.