Goldman Sachs warns that the market may be unprepared for either a December rate hike or no hike from the Federal Reserve, potentially triggering a new risk repricing. Cosimo Codacci-Pisanelli, a strategist in Goldman Sachs' Fixed Income, Currencies, and Commodities division, stated that Thursday's 17-basis-point drop in the 10-year Treasury yield, the largest single-day decline since March 2023, pushing it back below 5%, was driven by a reversal of the AI trade that had previously propelled rates higher. Goldman Sachs still views a December rate hike as the baseline scenario but believes the market will find it difficult to easily re-price a full 25-basis-point increase. The supply pressure on US Treasuries from AI capital expenditures and debt financing, along with energy prices and inflation trends, also makes the policy path harder to predict. As of October 23, Goldman Sachs data shows the market pricing in approximately a 90% chance of a December rate hike.