What Happens Next If Global Real Yields Continue Higher

Goldman Sachs warns that the recent spike in nominal yields is being driven by real rates rather than inflation, creating a restrictive environment that is 'nothing good' for risk assets. This 'tightening without inflation' regime threatens long-duration equities and emerging markets as financial conditions tighten.

Key Takeaways

• 1.Markets have entered a tightening regime driven by rising real yields rather than inflation expectations.
• 2.The current environment is characterized as 'tightening without inflation', which is negative for growth and risk asset valuations.
• 3.Structural pressures including AI investment and fiscal sustainability concerns are contributing to the upward move in real yields.

Table of Contents

• Implications
• Macro Regime Heatmap
• What this means / what's next?

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