Global bonds becoming tempting again
TLT•Goldman Sachs portfolio strategists shifted to overweight bonds on a 12-month horizon, while remaining neutral over three months, saying bond allocations are becoming more attractive for longer-term investors. They also shifted to overweight equities on both horizons.
1. Bond outlook improves
Goldman Sachs portfolio strategists said signs suggest the sharp rise in bond yields may have gone too far, too fast. They cited a macro baseline of normalising inflation, peaking energy prices and dovish central banks in shifting to overweight bonds over 12 months, while keeping a neutral three-month view.
2. Near-term risks remain
The strategists said Middle East tensions, US midterm election uncertainty and the AI capital expenditure boom complicate the near-term rates outlook. They also shifted to overweight equities on a three-month horizon, matching their 12-month allocation, citing supportive earnings growth and the potential for valuation expansion if rates ease.
