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GS Adam Crook - GS MORNING: 1) Higher Yields and Equities, 2) UK Data, 3) Brazil Update and 4) Marquee Quick Charts 18 Aug 2026 Adam Crook · Goldman Sachs · FICC & Equities Tue 18 Aug 2026, 4:54am ET

Highlights from GS Research, Sales, and Trading: 1) Higher Yields and Equities, 2) UK Data, 3) Brazil Update and 4) Marquee Quick Charts.

1) The Risk of Higher Yields to Equities

Perspectives from senior thought leaders on the risk posed by rising long-end yields…

Dom Wilson (Senior Macro Advisor): Longer-dated bond yields are already high, but a further rise may be the biggest near-term risk, especially in the scenario where growth and equities are holding up well. The latest concerns have centred on the Warsh strategy of limiting guidance about the Fed’s thinking. Since the market still needs to price what it thinks the Fed will do, the risk is that this adds to noise and volatility. Investors seem to be demanding a premium against that risk, as the joint declines in US equities, bonds and the Dollar on the day of the July FOMC meeting indicated. But the bigger story is that the mix of large fiscal deficits and increasing corporate financing needs is a recipe for upward pressure on real rates.

Rich Privorotsky (Head of European One Delta Trading): Rates are increasingly a supply problem, not necessarily a central bank discipline problem. Short term data has been softer and the front end has outperformed, but you cannot escape the hard facts… massive sovereign deficits alongside potentially >$1tn of annual AI capex, increasingly funded through debt markets. That is a lot of paper. Real rates need to clear it. At some point the Fed may even be forced to hike into weaker data to flatten the curve/re- anchor the back end.

A breakdown of the numbers on AI supply and duration…

Amanda Lynam (Chief Credit Strategist): A wide universe of AI-related subsectors and firms—across the IG, HY and leveraged loan markets, globally—have raised debt financing. In total, we estimate $489 billion of AI-related supply so far this year—already well above our full-year 2025 estimate of $322 billion. Across many markets, AI-related issuance represents a significant share of overall supply. More widely, USD IG issuance has already exceeded $1.5 trillion so far this year, leaving 2026 on pace to surpass the pandemic era record. We continue to see the risks to our full-year USD IG gross supply forecast of $2.1 trillion as skewed to the upside.

Analysing the sensitivity of equities to moves in yields…

Lee Coppersmith (Equity Derivatives Sales): The biggest risk we hear mentioned is long-end rates. If growth and equities remain firm, large fiscal deficits and rising AI-related financing needs could keep real

yields elevated even without another Fed hike – eventually creating a hurdle for valuations and the broader re-risking trade.

Ben Snider (Chief US Equity Strategist): Equities typically struggle when interest rates rise by more than two standard deviations over a given period. Today [24Jul], that two standard deviation threshold equates to a one-month increase in 10-year yields of about 50 bp, suggesting equities would struggle with a near- term rise in nominal yields to about 5% or a rise in real yields to roughly 2.7%.

Christian Mueller-Glissmann (Head of Asset Allocation in GIR): The level of rates plays a role, albeit a weaker one: historically, US 10y yields above 5% or real yields above 2-2.5% have been associated with more negative equity/bond-year correlations. A more robust indicator is the gap between 10y real rates and LT consensus real GDP growth expectations – when positive, it signals tighter monetary policy, which is a more challenging backdrop for equities.

CHART 1: US 10y Yield Increases Above 2 Standard Deviations Tend to Weigh on Equities. Source: Datastream, Goldman Sachs Global Investment Research.

CHART 2: We Expect Nearly $250 Billion of IG Hyperscaler Debt Issuance Globally for Full-Year 2026. Source: Dealogic (ION Analytics), Goldman Sachs Global Investment Research.