Goldman cuts 10-year yield forecast to 2.5%

Goldman Sachs slashed its year-end 2014 forecast for the U.S. 10-year Treasury yield to 2.5 percent from 3 percent.

Reflecting downgrades to the European economic outlook, the bank doesn't expect the yield to rise to 3 percent until the end of next year.

The 10-year yield is currently hovering around 2.1935 percent.

Looking ahead to 2016, Goldman expects the yield to rise to 3.50 percent by the end of the year and 3.75 percent by the end of 2017.