Goldman Sachs Projects Moderate Equity Gains for the Coming Year Amid Rising Bond Yields

Investors should brace for more gradual equity performance as Goldman Sachs’ chief global equity strategist Peter Oppenheimer forecasts mid‑ to high‑single‑digit returns over the next 12 months, down from the recent surge.

He noted that the S&P 500 and other global equity markets have delivered exceptional returns over the past year and year‑to‑date, and that these strong gains are unlikely to be repeated at the same pace.

Oppenheimer, known for accurate market calls, warned that a more muted backdrop lies ahead after the S&P 500’s 12% rise in 2026, emphasizing that “in most cases, we’re talking about mid- to high-single-digit returns…still relatively decent so long as economic growth continues.”

The bond market adds pressure: the 10‑year U.S. Treasury yield has climbed to its highest level since 2023, while the 30‑year Treasury is near a two‑decade high. Similar rises are evident in Japan (10‑year yield above 3% for the first time since 1996), the U.K. (highest since mid‑2007) and Germany (levels not seen since the 2011 debt crisis).

The synchronized sell‑off across major bond markets signals waning confidence in governments’ ability to manage debt and inflation, a development that could eventually weigh on equities.

Energy markets also add pressure. Crude oil has surged past $90 a barrel amid escalating Iran‑related tensions, pushing commodity prices—including corn and sugar—higher and feeding into broader inflation.

Analysts note that higher oil prices push yields even higher, which in turn pressures stock valuations. Tom Essaye of Sevens Report Research warns that until this dynamic unwinds, growth‑ and cyclical‑sector stocks may remain under stress.

Brian Sozzi is Yahoo Finance’s Executive Editor, host of the ‘Power Players With Brian Sozzi’ podcast and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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