Goldman Sachs rates strategist Muhammad Qubbaj believes 10-year Treasury yields have already seen their cycle highs, even with October CPI running hotter than consensus and pushing a 50bp December hike back onto the table — though the desk still frames 25bp as the more probable outcome. Per the full note , the team reads the market's prior decline in hike expectations as the setup that made the bond-yield surge so violent, and argues the Fed's own communications now lag a data-dependent reality. The practical takeaway for FX is a rates-led dollar that is more about the terminal-rate path than the next print, with EM credit stability and Brazil fiscal risk flagged as the secondary macro threads. No tracked currency pairs intersect this piece in our coverage, so the synthesis stays with the rates thesis and its cross-asset read-through.
What the desk is arguing
The desk's core call is that 10-year Treasury yields will not exceed recent highs, even as the market absorbs a hot October inflation print — a view articulated by Muhammad Qubbaj, co-head of North America Interest Rate Product Sales and Trading at Goldman Sachs. The framing is that the recent yield spike was a positioning unwind, not a repricing of the terminal rate higher.
Supporting evidence comes from the shape of rate expectations into December. Qubbaj notes the market had been pricing a 25bp hike before the hot CPI surprise, and that the print landed as a genuine shock, which is what made the bond selloff so sharp. The 50bp option is now described as "on the table" for December, but the desk weighs a smaller move as more likely.
The counterfactual the note implicitly rejects is that October CPI marks the start of a sustained re-acceleration forcing the Fed into a faster, longer hiking cycle. Goldman's read is that communication lags and positioning, not a regime shift, explain the move — which is why the desk caps the yield outlook rather than extending it.
How other firms see it
Goldman's rates call is a single-house view rather than a cross-firm consensus here, and the note pairs it with two secondary macro threads: emerging market credit has weathered the 2022 energy shock with "newfound stability," while investors are watching Brazil's fiscal trajectory after Lula's surprise re-election. The desk's economists also do not expect governments to rein in deficits in 2027, even where developed economies sit above the historical fiscal-consolidation threshold.
The read-through for FX runs through the dollar complex rather than any single pair in our coverage. USD/JPY is the most direct expression of a capped-but-sticky US 10-year yield, while EUR/USD will take its cue from whether the Fed's terminal-rate pricing stabilizes or extends. Brazil fiscal risk transmission sits in EM FX crosses rather than the majors.
What the calendar says
The only dated catalyst the note anchors to is the Federal Reserve's December meeting, where a 25bp versus 50bp outcome is the live debate. No high-impact events sit on our tracked calendar over the next 30 days for this jurisdiction, so the December FOMC is the pivot for the thesis rather than a near-term data point.
Key takeaways
01Goldman's Muhammad Qubbaj expects 10-year Treasury yields to stay below recent highs despite a hot October CPI print.
02A 50bp December Fed hike is 'on the table,' but the desk still sees 25bp as the more likely outcome.
03The market had been pricing a 25bp December move before the CPI surprise, which the desk reads as a positioning-driven yield spike rather than a terminal-rate repricing.
04EM credit stability and Brazil fiscal risk after Lula's re-election are the note's secondary macro threads.
05Goldman economists do not expect fiscal consolidation in 2027 even where developed economies exceed the historical threshold.
Market implications
Watch 10-year Treasury yields holding below the cycle high as the confirmation signal; a break above recent highs would challenge the desk's capped-yield thesis and likely extend dollar strength into USD/JPY. Into the December FOMC, the 25bp-versus-50bp split is the key positioning driver, and the rates market's repricing of the terminal rate is the cleanest tell for whether the dollar bid extends.
Risks to this view
A second consecutive hot CPI print before the December meeting would force the market to price a 50bp move as the base case and invalidate the capped-yield call. A hawkish Fed communication shift explicitly endorsing faster tightening would undercut the positioning-unwind interpretation and push Treasury yields through recent highs. On the secondary threads, a Brazil fiscal slippage headline would reverse the EM credit stability narrative and spill into EM FX crosses.
Emerging market credit matures .keep-white { color:#ffffff !important; } .keep-black { color:#000000 !important; } .gsFooterGrey * { color:#000000 !important; } ul.gsFlushList li { text-indent:-1em !important; margin:0 0 0 25px !important; } table { border-collapse:collapse; border-spacing:0; } img { height:auto !important; } .gsContentWidth { width:640px !important; } Briefings Newsletter ( ) Briefings Newsletter ( ) The key insights ( ) today: ▪ Ten-year Treasury yields are unlikely to exceed recent highs, even as markets digest a ‘hot’ inflation print, says Muhammad Qubbaj, co-head of North America Interest Rate Product Sales and Trading. ▪ Emerging market credit has weathered the energy shock this year with newfound stability. ▪ Investors are focusing on Brazil’s government spending following Lula's surprising re-election. ▪ Our economists do not expect governments to rein in deficits in 2027, even as some developed economies are above a threshold that is historically linked to fiscal consolidation. ▪ Quoted: Sports franchise valuations are becoming a new arena for competition between teams. ▪ Briefings Brainteaser: Which of these major US sports leagues was the most recent one to allow institutional investment? Want to sign up and stay connected? Click here ( ).
Will ‘Hot’ Inflation Data Push the Fed to Hike Rates Faster? ( ) Muhammad Qubbaj on The Markets Higher-than-expected US inflation in October means a bumper 50-basis point hike is “on the table” at the Federal Reserve’s December meeting—but a smaller hike remains the more likely option—says Muhammad Qubbaj, co-head of North America Interest Rate Product Sales and Trading in Goldman Sachs FICC and Equities. The rates market is pricing a 25 basis-point hike in December, but recent Fed communications and the hot inflation print came as “a surprise” to the market, Qubbaj says. Market expectations for a rate increase had been declining, which helped create the conditions for a sharp increase in bond yields this week following the inflation news. “While we're confident on the direction of which way the Fed is going, it's about size and timing right now,” Qubbaj says on The Markets podcast ( ) .
His base expectation is for 10-year Treasury yields to stay below their recent 5.3% highs unless economic growth expectations rise significantly. The specific combination of factors that drove yields to their October high is unlikely to recur, Qubbaj adds. ( ) When bond yields rise, their impact on stocks and credit depends largely on the factors driving the increase, Qubbaj observes. If economic growth and strong company earnings drive up interest rates, then equities and credit can rally.
But if higher rates are caused by concerns about the market’s ability to absorb new bond supply or the risk of holding a long-term bond rather than shorter-term alternatives, then the impact on stocks and corporate credit can be negative. Listen to the full episode ( ) for more on how markets are responding to volatility from energy prices, interest rates, and AI. Emerging Market Credit Shows Resilience amid Energy Shock When the Iran war sent oil prices surging this year, credit markets in the developing world absorbed the shock with newfound steadiness.
This is a sign that the asset class has matured ( ) , according to Anupam Damani, co-head and senior portfolio manager of emerging markets debt at Goldman Sachs Asset Management. “Emerging market credit is now unrecognizable, and I mean that in a good way,” Damani says. “These bonds used to come with a crisis label, but this market is no longer monolithic. In my view, it's become a more diverse and increasingly resilient asset class.” To be sure, emerging market bonds run the gamut in terms of risk, and investors must be selective about what they trade in a marketplace with myriad issuers, she says. But a market once defined as a “risk-on, risk-off trade” has become more diverse, Damani says.
The sovereign universe encompasses more than 80 countries and is supported by deeper local-currency markets, stronger reserve buffers, and more credible inflation-policy frameworks. There is also a fast-growing corporate segment of globally competitive issuers. Financial data from issuers has become more standardized to international norms.
And the US dollar constraint has loosened as issuers lean on local currencies, as well as euros and renminbi for bonds. “Returns are increasingly driven by fundamentals and valuations,” Damani says. Read the full article ( ) on emerging market credit. Brazil’s Fiscal Deficit Takes Center Stage After Lula's Win Investors are focusing on Luiz Inácio Lula da Silva’s approach to public finances for South America’s biggest economy following his unexpected re-election as president of Brazil last month, according to Goldman Sachs Research.
The public-sector fiscal deficit is running at 9.5% of GDP and is on track to exceed 8% of GDP every year of Lula’s four-year term, says Alberto Ramos, head of the Latin America Economic Research team. That means the public sector must borrow 8% of GDP annually from domestic or foreign markets, with knock-on effects on growth, interest rates, and credit spreads. “Lula’s re-election was a big surprise to market consensus, and it will be important to have specific, credible measures of spending containment," Ramos says. "Investors will be looking for measures that improve the fiscal baseline.” On November 4, the central bank paused its rate-normalization cycle and held the benchmark at 13.75%. Goldman Sachs Research forecasts inflation of 5.3% this year, well above the central bank's 3% target, while GDP growth is projected at 1.6% in 2026 and 0.6% in 2027.
The silver lining is commodities. Soybean, iron ore, and oil exports underpin a trade surplus of $80-$90 billion and anchor a moderate current-account deficit. Investors now await Lula’s pick for finance minister for signals on spending discipline, Ramos says.
Read more of our insights on financial markets ( ). The Key Number for Analyzing Government Deficits: Four Percentage Points When governments do not voluntarily rein in public spending, markets often force a consolidation which is ultimately more painful, according to Goldman Sachs Research. An analysis of actions to reduce deficits in 17 developed-market economies shows that every 1% of GDP of discretionary tightening—when a government proactively chooses the consolidation—lowers GDP by an average of 0.6% after four years.
Consolidations of the same size driven by market stress or by the government complying with binding fiscal rules—the two often overlap—have a bigger GDP impact, at 0.8% and 1%, respectively. “Since market-driven consolidations are usually much larger, they have in aggregate the most negative impact on growth,” write economists Johan Allen and Joseph Briggs, who leads the Global Economics team, in a report. Historically, a sharp rise in interest rates combined with a large debt-stabilizing gap—the distance between a government’s primary balance and the level that keeps debt/GDP stable—has signaled that consolidation is likely. When the debt-stabilizing gap has exceeded four percentage points of GDP, as it does today in France, the US, and the UK, a consolidation has followed within three years almost half the time. “Still, our country economists do not forecast meaningful developed-market-wide fiscal consolidation in 2027,” Allen and Briggs write.
France appears the most likely candidate for consolidation, given its large debt-stabilizing gap and sharp rise in bond yields. But their base case expectation is that the French deficit exceeds 5% in 2027 before declining in 2028. Read more of our insights on macroeconomics ( ) .
Quoted: The Investor Playbook for Building Winning Sports Teams ( ) Nicole Pullen Ross on Goldman Sachs Exchanges “Ultimately, every investor in a sports team is most interested in winning, and so all of the investment that they can make that will help the team become more valuable allows them to invest more in their players and increase their opportunity for winning.” —Nicole Pullen Ross, lead of Sports and Entertainment Solutions in Goldman Sachs Private Wealth Management Sports franchises are receiving a boost from an influx of institutional capital and soaring media rights valuations. But with the average US stadium now costing around $1.7 billion to construct, building a new venue is “a big decision” for sports investors, Pullen Ross observes on the Goldman Sachs Exchanges ( ) podcast. She explores how new technologies, increased personalization, and international expansion are creating new business opportunities for sports franchises as investors seek every edge for their teams.
In a new report ( ) , read how Goldman Sachs Private Wealth Management clients are allocating capital amid a changing philanthropic landscape driven by government debt, demographics, and AI. Briefings Brainteaser: A League of Their Own As sports team valuations rise and the amount of capital required to fund them increases, leagues and owners are increasingly turning to institutional investors for liquidity, growth capital, and operational expertise. Which of these major US sports leagues became the most recent one to allow institutional investment in 2024?
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