Goldman Sachs “throws cold water” on fanatical bulls: stock market returns will shrink significantly in the next 12 months, and a wave of global bond market sell-offs is sounding a wake-up call

Investors who are optimistic about the market may lower their expectations next year. Goldman Sachs strategists expect that the increase in the stock market will slow down in the next 12 months.

The Zhitong Finance App learned that Peter Oppenheimer, Goldman Sachs's chief global stock strategist, said in an interview, “We must admit that the S&P 500 index and other global stock markets have achieved extraordinary returns over the past year and so far this year. As a result, we have reaped plenty of good returns. We expect lower returns in the future.”

Over the years, Oppenheimer has had a large loyal following on Wall Street with many farsighted market predictions. At the beginning of March this year, before the stock market hit a low of the year later in the month, he was cautious about the market.

Oppenheimer added, “For the most part, we're talking about medium to high unit (percentage) returns over the next 12 months, which is lower than what we've seen in various regions over the past 12 months,” “but this is still a relatively good result as long as the economy continues to grow.” That's what we expected.”

What is certain is that after the S&P 500 index rose 12% in 2026 so far, the factors that have stabilized the stock market towards the end of the year are already in place.

On the one hand, the sell-off in global government bonds is intensifying, and its ferocious momentum should be a wake-up call for investors large and small. The yield on 10-year US Treasury bonds, which is the world's most important single interest rate and the benchmark for pricing everything from mortgages and car loans to credit cards, recently hit the highest level since 2023.

The yield on US 30-year Treasury bonds is close to a 20-year high, which is of no benefit to those planning for long-term financial security.

What makes this moment all the more worrisome is that bond yields are rising around the world.

The yield on Japan's 10-year treasury bonds has just risen above 3% for the first time since 1996. The UK 10-year Treasury yield just hit its highest level since mid-2007. The yield on German 10-year treasury bonds is at a level not seen since the peak of the European debt crisis in 2011.

Miller Tabak strategist Matt Marley wrote in a report: “The stock market has been able to ignore these trends so far this year. However, as we've seen in the past, higher yields don't have an impact on the stock market... until they start having an impact.”

It's no coincidence when the US, Japan, UK, and Germany bond markets sell off at the same time — it's a sign.

This signal indicates that global investors are losing confidence in the government's ability to manage debt, control inflation, and maintain good fiscal order.

Meanwhile, the price of crude oil once again broke through $90 per barrel, driven by the escalation of geopolitical tension involving Iran and the corresponding impact on the Strait of Hormuz.

The sharp rise in energy costs is directly transmitted to the wider economy, driving up the prices of transportation, agriculture, and manufacturing inputs. Prices of commodities such as corn and sugar have skyrocketed in recent weeks.

Tom Esse, founder of Sevens Report Research, said: “All in all, high oil prices are driving up yields, and higher yields are putting pressure on the stock market. Until this dynamic is lifted (which has happened a few times in the past, at least temporarily), we can anticipate that the market will continue to be led by the growth/cyclical sector and maintain a weak trend.”