Goldman Sachs Group Inc. says Treasury investors have overreacted to the U.K.’s shock vote to leave the European Union by sending yields to record lows.
The bank says it would “lean against this recent rally” in bonds on the assumption the local impact of a Brexit will have “a limited or negligible spillover to rest of the world,” and won’t prevent the Federal Reserve from raising interest rates this year. Yields on 30-year Treasuries dropped to an unprecedented level on Tuesday, after 10-year yields reached a record low on July 1 amid a rally in sovereign debt worldwide as the U.K. referendum result clouded the outlook for global growth.
