“We Like Bonds”

Goldman Sachs interprets recent U.S. labor data as a temporary distortion driven by the government shutdown, maintaining that the economy remains soft rather than collapsing while projecting only two Federal Reserve rate cuts throughout 2025. The firm advocates for an intermediate-duration bond strategy between two and five years to balance yield pickup against global term premium risks, avoiding the longer end of the curve despite tight corporate credit spreads. Market outcomes will likely pivot on whether AI-driven productivity achieves a disinflationary expansion or if a sharper labor deterioration prompts a more aggressive monetary response from the central bank.