Goldman Sachs Goes Overweight on Both Stocks and Bonds as Treasury Yield Surge Draws Wall Street Buyers

Goldman Sachs strategist Christian Mueller-Glissmann on Monday upgraded both equities and bonds, moving the bank to overweight on stocks over three months and overweight on long-duration bonds over 12 months. The call comes after weeks of selling drove Treasury yields to multi-year highs, with Mueller-Glissmann arguing that lower equity valuations improve the setup heading into third-quarter earnings season and that normalizing inflation makes long-duration debt increasingly attractive. Kalshi prediction markets placed a 62% probability on the S&P 500 reaching 8,000 this year alongside the Goldman upgrade.

Goldman was not alone. Citigroup separately favored shorter-term Treasuries, citing slowing inflation and weaker wage growth as reasons the Federal Reserve was unlikely to tighten further. Broader Wall Street sentiment shifted toward seeing duration risk as a value opportunity rather than a threat, with signs of stress in credit markets and easing technical pressures reinforcing the case for a bond rebound.

The bond selloff itself was compounding through market mechanics. Reuters reported that the surge in yields triggered mortgage hedging flows, as holders of mortgage-backed securities sold Treasuries or entered rate swaps to offset the extension of their holdings, adding further upward pressure on yields. That dynamic, common in sharp rate-sell-offs, risks becoming self-reinforcing before it stabilizes.

Elsewhere in fixed income, the Schwab High Yield Bond ETF (SCYB) attracted attention as its yield approached 8%, with analysts citing widening credit spreads as a potential entry point. Global Net Lease's 7.50% Series A Preferred Stock (GNL.PRD) also crossed above an 8.5% effective yield intraday, with shares trading as low as $21.66 against an annualized dividend of $1.875. Managed futures strategies were highlighted as a possible diversifier for investors whose traditional bond allocations were no longer providing the ballast they once did.