Brian Chappatta, Columnist

Goldman Sachs's Big Bond Call Is Just Bluster. Again.

The bank is probably right that the yield curve will steepen in 2021, but the move will look paltry in a historical context and won’t do much harm to total returns.

November 11, 2020 at 11:00 AM UTC

By Brian Chappatta

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Another year, another “baby bear market” bond call.
Photographer: SOPA Images/LightRocket via Getty Images

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Goldman Sachs Group Inc. is at it again in the world’s biggest bond market.

That was my immediate thought when I saw the Bloomberg News headline, “Goldman Goes All-In for Steeper U.S. Yield Curves as 2021 Theme.” The firm’s year-ahead investment outlook recommends that traders position for longer-term Treasury yields to rise on expectations for real growth and inflation, while the Federal Reserve pins down front-end rates near-zero. That’s sensible — and borderline consensus at this point — but just how far do the strategists expect this trade to go?