Goldman Sachs has upgraded its outlook on both stocks and government bonds, signaling a shift in its asset allocation strategy. The investment bank’s team, led by Christian Mueller-Glissmann, now recommends overweighting equities on a 12-month horizon and has raised 10-year government bonds from neutral to overweight. This move comes as bond yields have risen by a full percentage point year to date, making fixed income more attractive.
Goldman acknowledges that while tactical caution remains due to fiscal concerns, inflation uncertainty, and AI-related capital competition, the combination of higher carry and improved return asymmetry supports a more normal strategic allocation to bonds. The firm also shifted its short-term credit outlook to underweight, reflecting widening corporate spreads and repricing of Euro area sovereign risk. This adjustment highlights a broader market trend where rising yields are beginning to pressure credit markets, particularly affecting tech companies seeking new debt issuance.
Source: Financial Times Markets · Summarized by HeadlinesBriefing