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2025-08-01 11:14:04
Goldman Sachs: Global credit spreads narrow to their lowest level since 2007, recommending hedging. Goldman Sachs credit strategists recently issued a warning to clients, advising them to hedge their risks. The team noted, "Recent trade agreements between the United States and its trading partners have made the tariff outlook more clear, and investors are willing to overlook near-term economic weakness as long as recession risks remain manageable." However, they also warned against complacency. Global investment-grade corporate bond credit spreads narrowed to 79 basis points on Thursday, the lowest level since July 2007, just before the global financial crisis. Despite the continued narrowing of credit spreads and the S&P 500 hitting a new record high this week, the Federal Reserve has not given clear signals of an impending rate cut, indicating that it still needs more data to confirm that inflation risks are not lingering. Goldman Sachs strategists emphasized, "Sufficient downside risks remain to warrant maintaining some hedges in investors' portfolios. The possibility of further weaker-than-expected economic growth, weakening disinflationary pressures, or renewed concerns about the Fed's independence could trigger a sharp drop in long-term bond yields."
