Goldman's GOAL Cuts Equities to Neutral, Corporate Credit to Underweight
Goldman Sachs' Global Opportunity Asset Locator (GOAL) downgraded equities to Neutral over the next 3 month. Corporate credit was downgraded to Underweight over the same period. The report notes potential risk from a rise in government bond yields.
"We think the likelihood of a rise in government bond yields has increased and see this as a key aspect of the near-term macro outlook," said analyst Anders Nielsen.
On equities, he said, "We downgrade to neutral over 3 months as a sell-off in bonds could lead to a temporary sell-off in equities. This makes the near-term risk/ reward less attractive despite our strong conviction that equities are the best positioned asset class over 12 months, where we remain overweight."
On Corporate credit, he said, "We downgrade to underweight over both 3 and 12 months. We think spreads will narrow slightly, but given already tight levels, rising government bond yields are likely to dominate the returns, especially for US IG credit where spreads are the lowest."
Commodities remain Neutral and government bonds remain Underweight.
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