Goldman Sees 30% Recession Risk as Oil Tops $116 and Yields Surge
Goldman Sachs now estimates a 30% probability of a US recession over the next 12 months as oil prices have climbed above $116 per barrel. US Treasury yields have surged, with two- and five-year rates up over 50 basis points since late last month, pushing 10-year yields to 4.40%.
1. Elevated Recession Probability
Goldman Sachs analysts have raised the probability of a US economic downturn to 30% over the next 12 months, reflecting concerns about slowing growth driven by higher energy costs and tightening credit conditions.
2. Oil Price Spike and Yield Response
Crude oil has surged past $116 per barrel, exacerbating inflationary pressures and triggering a selloff in Treasury securities; two- and five-year yields have climbed more than 50 basis points since late last month, with the 10-year at 4.40%.
3. Federal Reserve Outlook
The combination of elevated energy prices and rising yields challenges the Federal Reserve’s rate path, as officials weigh the risk of further tightening against a potential slowdown that could necessitate future easing.