Goldman Sees Bonds as Attractive, But Warns Against Overexposure

Goldman Sachs strategists led by Christian Mueller-Glissman argue that higher bond yields improve the long-term case for holding bonds, but they're not recommending a complete shift to longer-duration bonds.

The increase in yields can help absorb future rate hikes and steer optimal bond allocations back towards historical ranges, according to Goldman. However, the near-term picture is more complicated due to ongoing energy shocks and interest rate uncertainty.

Goldman expects stocks and bonds to remain driven by these factors, making it unwise to add long-dated bonds to portfolios now. Instead, they recommend a return to 'normal' strategic bond allocations, but with caution.

JPMorgan Asset Management's Bob Michele has already started buying longer-maturity US, Japanese, and Australian government debt, describing current valuations as 'simply too cheap.'