Goldman prices the damage from near-quarter-century Treasury yields at 0.2 points of US growth

Goldman's 0.2 points is a forecast for next year, and its economists framed it as something elevated yields "could" do ^[7]. The damage already on the record is narrower. Several major commercial real estate deals are in doubt because buyers want better terms, according to Semafor ^[5]. Lower-rated corporate borrowers are paying sharply higher rates on their debt ^[6].

A property buyer who wants better terms is telling the seller that the old price no longer works at the new cost of debt. If rents hold, the building is worth what it was to an owner who never has to borrow against it. Its price to anyone financing a purchase has fallen. Sellers with loans coming due cannot wait for that gap to close. Sellers without them can, and their deals are the ones most likely to stay stuck.

The cost to lower-rated companies works the same way on a slower clock. A company pays the higher rate only when it borrows or refinances, so the sharp rise Semafor describes moves cash from operating budgets to lenders one maturity at a time ^[6]. The reports do not include the 10-year yield level, the names of the property deals, or the size of the rise in lower-rated borrowing costs.

If the slight rebound Treasurys made after the near-quarter-century high holds, the doubtful deals reprice and close, and 0.2 points looks like a ceiling ^[1][2]. If yields keep doing what they did on Monday, when several key maturities set fresh multi-decade highs, the figure becomes a floor ^[3]. Seeking Alpha's account points that way: it says multiple forces are pushing market rates up and sees little indication that relief is imminent ^[9]. The third route runs through Europe. Yields across much of the G7 have surged on stubbornly high inflation and unrelenting borrowing, and economists are particularly worried about a European debt crisis ^[4].

I think the second route is the likelier one. The pressure comes from inflation and borrowing in several countries at once, and neither unwinds in a week ^[4][9]. The counter-case is fair: 0.2 points is small, and a deal in doubt is often a deal waiting for a lower price. A market that rebounded once can do it again ^[2]. The damage thesis is wrong if the stalled property deals close on their original terms.

Goldman's economists also said elevated yields could threaten the stock boom and force the government to prioritize deficit reduction ^[8]. Those two warnings say more about where money goes than the growth figure does. A government cutting its deficit in a slowing economy spends less just as growth weakens, so I'd expect that choice to add to the 0.2 points.