A senior executive at Goldman Sachs says bonds are now more attractive than equities because rising yields and global uncertainty are driving market volatility.
On the company’s “The Markets” podcast, Lindsay Rosner, chief investment officer at Goldman Sachs Asset Management, says. recent instability driven in part by energy shocks associated with the Iran conflict.
These shocks have pushed yields higher and forced markets to reassess expectations for central bank policy.
Rosner said the bond market faces inflationary risks and a shift in expectations around the Federal Reserve, with investors increasingly anticipating lower interest rates or potential hikes.
Despite this uncertainty, he says the current situation is creating opportunities for sustainable investment, especially as yields have risen and credit spreads have gradually widened.
“So, when I think about what happened – we’re less than a month away from the deal – I have to think to myself, what would I rather be, a bond or a stock? And I’d rather be a bond.” And maybe it’s not surprising as a marketer, but I’m trying to be objective.
The reason I think you want to be an architect is because, if it starts to have problems in development, you want to be high on the design. The bond is above the equities for sure and is not expected to grow gangbuster.
We think there will still be continued growth in the US and the rest of the world, despite everything that’s going on. But the bond is a good place to be, and we’ve had all the yield because the base rates have gone up a lot and spreads have widened a little bit. These together have created a real harvest. It’s booming and exciting right now and I think you should take advantage of it. “
Rosner adds that while bonds are not a reliable hedge in times of inflation-driven uncertainty, they remain attractive in environments where growth slows and central banks eventually return to tapering.
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