|
Bearish on the bond
|
 |
January 11, 1999: 12:40 p.m. ET
Goldman Sachs, DLJ both warn that Treasurys haven't bottomed out yet
|
NEW YORK (CNNfn) - Two major Wall Street securities houses turned their noses up at U.S. Treasury bonds Monday, counseling investors to allocate more money to stocks.
"We would be cautious in making commitments in Treasurys right now," Goldman Sachs & Co. said in its latest weekly U.S. economic commentary, citing stronger-than-expected economic growth and the unlikelihood of a near-term interest rate cut.
Goldman boosted its prediction for the U.S. 30-year bond yield for the next three months by 20 basis points to a 5.40 percent yield.
The yield has skyrocketed in recent weeks from all-time low of 4.72 percent hit Oct. 5. By late morning Monday, 30-year Treasurys were down 15/32 to 99-4/32, yielding 5.30 percent.
"We do not believe that the sell-off in the bond market is over yet," Goldman said.
The influential investment bank also raised its forecasts for U.S. economic growth, upping its Gross Domestic Product (GDP) expectations from 3.5 percent to 4.2 percent.
Goldman also cited a boisterous December jobs report, strong holiday sales and continued strength in U.S. housing markets as factors in its decision.
Furthermore, the bank does not see the Federal Reserve changing interest rates in the near future.
"Look for Chairman (Alan) Greenspan to dampen expectations of further easing in his Jan. 20 testimony before the House Ways and Means Committee," the firm said.
Separately, Donaldson Lufkin & Jenrette chief investment officer Thomas Galvin Monday lowered the portion of his model portfolio allocated to bonds from 20 percent to 15 percent.
The move, confirmed by Galvin's office, raised stocks to 80 percent of portfolios for balanced accounts from a previous level of 75 percent, keeping cash reserves at 5 percent. 
-- from staff and wire reports
|
|
|
|
|
 |
|
