Goldman Sachs Upgrades Stock and Bond Market Outlook

Goldman Sachs upgraded its outlook for stock and bond markets, advising clients to maintain an overweight position in equities for the next three months and viewing bonds as a buy over the next year.

Strategist Christian Mueller-Glissmann attributed the positive equity outlook to supportive earnings growth and a recent valuation de-rating occurring ahead of the third-quarter earnings season. He noted that global equities have remained range-bound despite strong underlying earnings, leading to a material de-rating as bond yields rose.

The bank maintains a macro baseline of inflation normalization and peaking energy prices, despite elevated oil prices driven by Middle East tensions and concerns over Federal Reserve interest rate hikes. Goldman Sachs highlighted that U.S. 10-year Treasury and 30-year bond yields have reached their highest levels since 2002, making longer-dated bonds more attractive for investors with longer horizons.