Goldman Sachs douses the enthusiasm of the fervent bulls: stock market returns are expected to shrink significantly over the next 12 months, and the global bond market sell-off is sounding alarm bells.

Investors optimistic about the market may need to lower their expectations for next year, as Goldman Sachs strategists predict that the stock market's growth will slow in the coming 12 months. Peter Oppenheimer, Chief Global Equity Strategist at Goldman Sachs, stated in an interview, We have to acknowledge that the S&P 500 index and other global equity markets have delivered extraordinary returns over the past year and so far this year. As a result, we have already reaped a significant amount of good returns. We expect future returns to decrease. Oppenheimer has garnered a loyal following on Wall Street over the years due to his prescient market forecasts. In early March of this year, he held a cautious outlook on the market before it hit a low for the year later that month. He added, In most cases, we are talking about mid-to-high single-digit percentage returns over the next 12 months, which is lower than what we have seen in various regions over the past 12 months. He continued, However, as long as the economy continues to grow, this is still a relatively decent outcome. That is our expectation. Certainly, with the S&P 500 index having risen 12% year-to-date in 2026, various factors are already in place for the stock market to stabilize as the year comes to a close. On one hand, a global sell-off in government bonds is intensifying, and its fierce momentum should serve as a warning bell for investors of all sizes. The yield on the U.S. 10-year Treasury bond, the most important single interest rate in the world and the pricing benchmark for everything from mortgages and auto loans to credit cards, has recently reached its highest level since 2023. The yield on the U.S. 30-year Treasury bond is nearing a 20-year high, which is not beneficial for those planning for long-term financial security. What makes the current moment particularly concerning is that the rise in bond yields is happening globally. The yield on Japan's 10-year Treasury bond has just surpassed 3% for the first time since 1996. The yield on the U.K.'s 10-year Treasury bond has recently reached its highest level since mid-2007. The yield on Germanys 10-year Treasury bond is at levels not seen since the peak of the European debt crisis in 2011. Matt Maley, a strategist at Miller Tabak, wrote in a report: So far this year, the stock market has been able to ignore these trends. However, as we have seen in the past, higher yields do not remain non-influential on the stock market...until they start to have an impact. It is no coincidence that the bond markets of the U.S., Japan, the U.K., and Germany are experiencing sell-offs simultaneously it is a signal. This signal indicates that global investors are losing confidence in the government's ability to manage debt, control inflation, and maintain fiscal order. Meanwhile, driven by escalating geopolitical tensions involving Iran and their impact on the Strait of Hormuz, oil prices have surged above $90 per barrel once again. The sharp rise in energy costs directly translates to broader economic areas, driving up prices for transportation, agriculture, and manufacturing inputs. In recent weeks, the prices of commodities such as corn and sugar have skyrocketed. Tom Essaye, founder of Sevens Report Research, stated: Overall, high oil prices are pushing up yields, and higher yields are putting pressure on the stock market. Until this dynamic is alleviated (which has happened several times in the past, at least temporarily), we can expect the market to continue to be led down by growth/cyclical sectors, maintaining a weak trend.