Goldman Sachs: China Interest Rate and Commodity Market Outlook

Goldman Sachs highlights growing downward pressure on China's interest rate market, forecasting the 10-year government bond yield will decline to 2.5% by the end of 2026 from the current 2.8%. On the commodity front, weak demand is expected to push average copper prices down to $8,500 per ton in 2026, a notable drop from $9,000 per ton in 2025. The firm maintains its GDP growth forecast for China at 4.5%, though significant downside risks persist due to ongoing property market weakness and export uncertainty. Policymakers may implement an additional 10 basis points of rate cuts, but overall room for monetary easing remains tightly constrained by inflation and financial stability considerations. Industrial metal demand is projected to remain sluggish across the board. Meanwhile, the renminbi is expected to trade broadly sideways around the 7.2 level against the US dollar. The underlying analysis suggests that continued property sector softness and trade headwinds will fundamentally drag on overall demand. While some policy easing is anticipated, its extent is strictly capped, limiting the magnitude of interest rate declines and leaving base metals broadly pressured by a convergence of weak global manufacturing and slowing domestic Chinese consumption.