Treasury yields steady as Goldman shifts cut to September

Goldman Sachs forecast: September Fed cut amid Iran war inflation risk

The firm’s projections place the Fed’s preferred inflation gauge, the PCE price index, at 2.9% by year-end in its baseline. If oil were to average about $110 per barrel during March–April, the same measure could run closer to 3.3% this year, implying less room for near‑term easing than previously assumed.

How Iran conflict may lift inflation and shape the Fed path

Energy shocks typically feed through to headline inflation via gasoline and heating costs, while also lifting transportation and input costs that can ripple into goods and services. Shipping and insurance premia can rise alongside regional security risks, adding to delivered costs, while any sustained increase in oil can influence inflation expectations, factors the Fed monitors when gauging whether inflation is on a “sustained” path back to 2%.

The bank has characterized the macro effects as limited but persistent. As reported by The Associated Press, Goldman Sachs economists said the Iran war could have a “sustained, if modest” impact on the U.S. economy.

Market implications and key data to watch: CPI, PCE, jobs, oil

A September start to rate cuts would, all else equal, keep front‑end Treasury yields firmer for longer than an earlier‑cut scenario, while mortgage rates could remain elevated relative to where they might be if easing began sooner. Equities may continue to balance resilient earnings against higher discount rates, and the dollar could find support if U.S. policy stays tighter for longer; in each case, realized outcomes will depend on the inflation and growth data that arrive in the coming months.

The data that matter most from here include monthly CPI and PCE readings, payrolls and wage growth, and the trajectory of oil prices amid any escalation headlines or OPEC+ supply decisions. The figures indicate that if oil were to average around $110 during March–April, year‑end PCE inflation could be closer to 3.3% rather than 2.9%, a conditional path that would tend to keep the Fed cautious about cutting before there is clearer and sustained progress on inflation.