How Inflation and Fiscal Policy Are Driving US Treasury Markets

August 14, 2026

AI Summary

5 min read

The August CPI print came in “roughly down the middle,” as Mike Mitchell, head of US Treasuries and Inflation Trading at Goldman Sachs, put it. Core CPI was 21.5 basis points, but the read-through to core PCE—the Fed’s preferred gauge—was softer, partly because the “software” category, which carries more weight in PCE than CPI, was weak. Forecasters revised their inflation estimates lower after the release. For the Fed, the data offered some comfort, though the central bank still needs to get through a PPI report and another month of inflation data before its September meeting. The bond market rallied modestly, which Mitchell thought was appropriate: there are still several data points to live through before anyone can be confident about the September decision.

Inflation Still Dominates, Not Employment

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What you'll learn

1 (00:33) **Core CPI Print and Fed Implications** - Mike Mitchell breaks down the morning's CPI report and what it means for the upcoming Fed meeting.
2 (01:50) **The Dual Mandate and Labor Market** - Mitchell explains why the weak NFP report doesn't shift focus away from inflation.
3 (02:56) **Fiscal Policy and Term Premium** - Mitchell identifies the problematic fiscal path as a key driver of rising term premium in the bond market.
4 (04:14) **Treasury Auction Dynamics and Supply** - The 10-year auction was smoothly digested, but heavy supply remains a persistent headwind.
5 (06:01) **Corporate Supply Spillover into Treasuries** - The AI infrastructure build-out is adding another layer of supply pressure on the Treasury market.
6 (06:35) **Real Yields: Short-Term vs. Long-Term Investor Views** - Mitchell contrasts the near-term headwinds with the compelling long-term value in real yields.
7 (09:08) **The Trade: A Steepener** - Mitchell outlines his preferred positioning for the current environment.

+ Full timestamped outline available in the app

Show Notes

With a month to go until the Federal Reserve’s next rate decision, inflation is increasingly in focus for the US bond market, says Mike Mitchell, head of US Treasury and Inflation Trading in Goldman Sachs Global Banking & Markets. He explains why recent inflation data suggests the Fed could continue to hold rates steady in September, and how Treasury market supply, corporate credit issuance, and fiscal policy concerns are keeping pressure on longer-maturity Treasuries.

This episode was recorded on August 12, 2026.

The opinions and views expressed herein are as of the date of publication, subject to change without notice, and may not necessarily reflect the institutional views of Goldman Sachs or its affiliates. The material provided is intended for informational purposes only, and does not constitute investment, legal, or tax advice, a recommendation from any Goldman Sachs entity to take any particular action or be used as a basis for any other investment decision, or an offer or solicitation to purchase or sell any securities or financial products. Any forward-looking statements, case studies, computations or examples set forth herein are for illustrative purposes only. Past performance is not indicative of future results. Neither Goldman Sachs nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the statements or information contained herein and disclaim any liability whatsoever for reliance on such information for any purpose. Each name of a third-party organization mentioned is the property of the company to which it relates, is used here strictly for informational and identification purposes only and is not used to imply any sponsorship, affiliation, endorsement, ownership or license rights between any such company and Goldman Sachs. This material should not be copied, distributed, published, or reproduced in whole or in part or disclosed by any recipient to any other person without the express written consent of Goldman Sachs.

A transcript is provided for convenience and may differ from the original video or audio content. Goldman Sachs is not responsible for any errors in the transcript.

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