By Saeed Azhar
NEW YORK, Jan 12 (Reuters) - Goldman Sachs (GS.N) expects the 10-year Treasury yield to rise to 4.4% by the end of 2026, surpassing the current 4.175%, with U.S. economic growth outpacing its long-term trend, a report by its wealth management unit’s investment strategy group said on Monday.
The U.S. economic growth rate could be 2.3%, above the 2% trend for the world’s biggest economy, the Wall Street bank said.
Stronger growth “does tend to steepen the yield curve because you have growth running above its trend rate and then while we do expect the Fed to be cutting, the objective of Fed cuts is actually to stimulate the economy,” Brett Nelson, head of tactical asset allocation for Goldman Sachs Investment Strategy Group, told reporters.
A steeper yield curve means the gap between long-term and short-term interest rates is widening, often signalling expectations for strong future economic growth.
Rates futures traders are betting on a total of roughly 50 basis points in interest rate cuts for 2026, or two cuts of 25 basis points each, LSEG data showed.
Federal Reserve chair Jerome Powell is set to end his term in May, with future rate policy potentially shifting under his replacement. President Donald Trump, who has been pressuring the Fed since last year for more aggressive rate cuts, is expected to name Powell’s successor in the coming months.
The drop in the unemployment rate in December has however eased concerns about labor market weakness, with traders betting Powell has delivered his last interest rate cut before his term ends in May.
That leaves any further policy easing in the hands of whomever President Trump taps as Powell’s successor.
“It would be self-defeating to keep rates at an abnormally low level because you would simply get the financial markets steepening the yield curve,” Nelson said.

Goldman Sachs sees 10-year Treasury yield rising on above-trend US growth