Goldman Sachs: Fed Expected to Cut Rates by 25 Basis Points in September, Five-Year U.S. Treasuries Seen as the Best Trade Before the Rate Cut

According to a report by Jinse Finance, Goldman Sachs’ Chief Global Banking and Markets Strategist, Shifrin, stated that five-year U.S. Treasury bonds are currently the most attractive trading option amid the prospect of potential Federal Reserve rate cuts. He pointed out that five-year Treasury yields in the 3%-4% range offer investment value while also providing protection when market risks rise. At present, the five-year U.S. Treasury yield stands at 3.85%, a significant drop from 4.38% at the beginning of the year. A Reuters survey shows that 61% of economists expect the Federal Reserve to lower its benchmark interest rate by 25 basis points to the 4%-4.25% range at its September meeting. Goldman Sachs forecasts that, given the slowdown in real GDP growth and rising unemployment, the Fed may begin a rate-cutting cycle in the fourth quarter of 2025 and continue easing into 2026, ultimately adjusting the policy rate to the 3%-3.25% level. (Jin10)