Goldman Sachs sees Treasury yields staying higher for longer

Persistent Treasury volatility is keeping Goldman Sachs rates desks busy, and Phillip Lee said the pressure on yields may not ease soon. For the firm’s real money franchise, that means more conversations about hedging, issuance and portfolio rotation, and more value placed on the people who can translate macro noise into tradeable flow.

Lee, Goldman Sachs’ head of Real Money Rate Sales in Global Banking & Markets, laid out the case in a May 22 episode of The Markets that was recorded May 21. His message was that higher yields are being driven by more than one force at once: inflation risk from oil and tariffs, near-term AI cycle effects that make the path back to target look less certain, resilient risk assets and growth, and a fiscal premium that has started to matter more for longer-dated Treasuries.

That mix matters inside Goldman because it broadens the workload across rates sales, macro research and fixed income trading. Real money clients such as banks, insurers and asset managers typically care about balance-sheet durability and relative value, not just the fastest tactical trade. If yields stay higher for longer, those conversations become more frequent and more urgent, especially when the back end of the curve remains under pressure.

Goldman said the 30-year U.S. Treasury yield moved above 5% and reached its highest level since 2007. The 10-year yield was at 4.57% on May 21, and the 30-year bond had climbed to 5.121% earlier in the month. Goldman Sachs Research has also warned that equity markets are vulnerable when bond yields rise, even as stocks sit near record highs, because disappointing growth or inflation news can hit both sides of the book at once.

The firm has tied some of that pressure to U.S. deficits, saying investors are increasingly focused on fiscal concerns and that those worries are beginning to push up longer-maturity yields. It has also pointed to tariffs at their highest average level on U.S. imports in a century, while its 2026 outlook still calls for sturdy global growth of 2.8%. That combination helps explain why the Treasury market can stay tense even without an immediate recession scare.

For Goldman employees, the edge in this environment goes to the desks and careers built around duration risk, curve positioning and client segmentation. If Lee is right, the work will stay intense, the flow will stay active and the people who can read real money demand before it shows up in the market will be in the strongest position when compensation and promotion season come around.