Goldman Sachs expects the next pain point for bond traders to be five-year bonds.

Goldman Sachs strategist said that the next pain point for bond traders may come in the 5-year part of the yield curve. Strategists George Cole and William Marshall wrote in a report that 5-year bonds in Japan and Germany are particularly vulnerable, with the former heading towards a prolonged tightening cycle and the latter's economic outlook improving. Shorter-term bonds are heavily influenced by monetary policy bets, while 10-year and longer-term bonds are often more sensitive to inflation and deficit concerns. This makes 5-year bonds a "sweet spot" in the global bond market.