Bank of America strategists: Bonds become a strong alternative asset to U.S. stocks for the first time in decades

智通财经2026/10/07 10:16

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Savita Subramanian, Head of US Equity and Quantitative Strategy at Bank of America, stated that for the first time in decades, bonds have truly become a competitive alternative asset to the stock market. She also warned that investor sentiment is currently high, which means the stock market is more vulnerable to negative surprises and has relatively limited room for further upside surprises. Subramanian noted that the yield on the US 10-year Treasury bond has already surpassed 5%, while Bank of America's own valuation models indicate that the annualized return of the S&P 500 index over the next ten years may not reach this level. She pointed out that US policymakers are working to prevent long-term rates from rising too much. Both the Federal Reserve and the US Treasury Secretary are closely monitoring changes at the long end of the yield curve. Meanwhile, demographic shifts also mean that the ceiling for US interest rates may be lower than in the 1970s and 1980s. In addition, artificial intelligence may bring some deflationary effects in the future, which could ease long-term inflation and interest rate pressures. In this context, Subramanian believes that the environment for bond allocation is becoming more favorable, as it may be difficult for US Treasury yields to consistently rise above 6% to 7%.

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Savita Subramanian, Head of US Equity and Quantitative Strategy at Bank of America, stated that, for the first time in decades, bonds have truly become a competitive alternative asset to the stock market. She also warned that investor sentiment is currently at a high level, which means the stock market is more susceptible to negative surprises and has relatively limited room for further upside surprises. Subramanian noted that the current yield on US 10-year Treasury bonds has already exceeded 5%, while Bank of America’s own valuation model indicates that the S&P 500’s annualized return over the next decade may not reach this level. Subramanian pointed out that US policymakers are working to avoid long-term interest rates rising too high. Both the Federal Reserve and the US Treasury Secretary are closely monitoring changes at the long end of the yield curve. Meanwhile, demographic shifts also mean that the upper limit of US interest rates may be lower than levels seen in the 1970s and 1980s. In addition, artificial intelligence may bring some deflationary effects in the future, which could ease long-term inflation and interest rate pressures. Against this background, Subramanian believes that the allocation environment for bonds is becoming more favorable, as it may be difficult for US Treasury yields to continue to rise above 6% to 7%.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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Bank of America strategists: Bonds become a strong alternative asset to U.S. stocks for the first time in decades

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