Goldman Shifts Inflation Focus from Crude to Refined Products

Goldman Sachs is shifting its focus from Brent crude oil to refined products, specifically diesel and natural gas, as they pose a more significant inflation threat. The bank estimates that Persian Gulf oil exports have recovered to around 15-16 million barrels per day.

The September Federal Reserve decision is a crucial vote-counting exercise, with some policymakers, including Kevin Warsh, signaling hawkish stances while others, like Christopher Waller, are more dovish and willing to hold off on rate hikes unless inflation data surprises.

Treasury buybacks may improve the optics of the Fed's monetary policy but do not address the underlying long-end supply problem. Goldman Sachs continues to favor higher developed-market long-end yields and recommends curve steepeners. They also see European long-end rates as an attractive short opportunity.