Goldman Sachs: There is still room for further price declines in the market, with significant downside risks for copper prices.

Goldman Sachs has released a macro report stating that it is revising its forecast for the US economic benchmark from "recession" to "non-recession." It maintains its expectation of a 0.5% GDP growth rate in the fourth quarter of 2025 and predicts that the Federal Reserve will cut interest rates by 25 basis points in June, July, and September. However, market anxiety remains high - the 10-year US Treasury bond yield has experienced severe fluctuations, leveraged long positions liquidating and liquidity shortages intensifying volatility, with the probability of a recession still hanging at 45%. The alarm bells are also ringing for commodities. The latest report shows that the global copper market is expected to reverse from an expected shortage of 180,000 tons to an excess of 100,000 tons in 2025, primarily due to a significant downward revision in global demand growth (from 3.2% to 1.5% year-on-year in 2025). The tug-of-war between policy "defusing" and recession risks is pushing the market towards a new normal of rising volatility. Goldman Sachs' main points are as follows: Restoring the US macro benchmark forecast President Trump announced a 90-day suspension of "reciprocal" tariffs against specific countries. All previous tariffs and 10% of reciprocal tariffs will be retained, and Goldman Sachs expects industry tariffs to be introduced in the future. In summary, the cumulative impact of these tariffs may approach the actual tariff increase of 15 percentage points previously predicted by Goldman Sachs. Therefore, it is restoring the non-recession benchmark forecast, i.e., predicting a 0.5% GDP growth rate in the fourth quarter of 2025, with a peak core PCE inflation rate of 3.5%, a 45% recession probability, and the Federal Reserve making three consecutive "insurance" rate cuts in June, July, and September, each by 25 basis points. (Earlier, before President Trump's statement, Goldman Sachs had adjusted its benchmark forecast to a recession. Hazius) Interpreting the trend of US Treasury yields The recent extreme volatility in the US bond market reflects various factors. In addition to cyclical risks (which, to some extent, help explain the slope of the yield curve, even if not completely explaining the absolute level of interest rates), changes in the expected supply-demand balance of US bonds also seem to be a driving factor. Market positions and liquidity shortages may exacerbate price fluctuations. Although the market has been closely watching the possibility of foreign investors selling US bonds, this week's price fluctuations may not necessarily clearly reflect this factor. In the long term, global asset allocation may gradually reduce US dollar assets, but recent market performance seems to reflect investors' concerns about this possibility, as well as deleveraging long positions. After the implementation of tariffs: the market still has room for further pricing in a recession Since the announcement of the tariffs last week, market prices have fluctuated drastically. Analytical tools show that the market has significantly lowered its expectations for economic growth, accompanied by hawkish policy impacts, reflecting market concerns that the Fed's response to inflation risks may be more cautious than usual. The magnitude of the downward revision in economic growth expectations on April 3 and 4 exceeded that of any period except for the initial impact of the COVID-19 pandemic, a phase of the global financial crisis, and "Black Monday" in 1987. Although there has been a significant adjustment in cyclical pricing, the "growth benchmark assessment" analysis suggests that the market has not fully reflected expectations of a general economic recession. The market is likely to continue to move towards pricing in a full economic recession, which would mean weakening stock markets, widening credit spreads, the Fed entering a more extensive rate-cutting cycle, and long-term stock market volatility increasing. Potential conditions for market stabilization include policy reversals, significantly discounted prices to cushion downside risks, or signs that the economic impact of tariffs is milder than feared. (Dominik Wilson) Significant downside risk for copper prices The forecast for a 100,000-ton surplus in the global copper market in 2025 (previously forecasted shortage of 180,000 tons) is mainly due to the downward revision of demand growth for refined copper in 2025 and 2026, expected to increase by 1.5% and 2.3% year-on-year, respectively (previous forecasts were 3.2% and 1.8%). Goldman Sachs expects that the slowdown in global GDP growth will impact demand outside of China. Therefore, copper prices are expected to drop to an average of $8,300 per ton in the third quarter of 2025, significantly lower than the forward price at the close on Tuesday by $368 per ton. (Goldman Sachs now expects copper prices to drop to $8,300 per ton in the third quarter of 2025, with significant downside risks) Goldman Sachs believes that at this price level, reduced global copper exports and delayed mine maintenance capital expenditures will help stabilize the market and rebalance it. Subsequently, by December 2025 and December 2026, copper prices are expected to rise to $9,400 per ton and $10,600 per ton, respectively (previously forecasted at $10,250 per ton and $11,400 per ton respectively), which is crucial for stimulating existing mining investments in Chile. - Johan Dinsmore This article is reprinted from the WeChat official account "", GMTEight Editor: Chen Yufeng.