Goldman Sachs GS, +1.16% strategist Abby Joseph Cohen, who long ago emerged as the bullish face of the go-go days of the 1990s, was decidedly less bullish on stocks in a Bloomberg interview Tuesday.
Specifically, Cohen warned that the risk of a trade war could ultimately be a problem for the S&P 500 SPX, +0.31% , which she says is in an “OK, not great” position in terms of its current valuation.
“Over the last year or two or three, the significant demand in U.S. equities has come from the countries where the president is now talking about slapping significant tariffs,” she continued. “That can’t make those investors particularly friendly towards the United States.”
But it’s the bond market she finds to be particularly troubling.
“I’m more concerned about fixed income than equities,” Cohen said. “There’s already been a notable rise in interest rates at the intermediate and long end. I think it will be increasingly difficult for fixed-income investors to do well.”
She believes that 10-year Treasury yields TMUBMUSD10Y, -0.41% will rise to 3.6% by the end of next year, up from about 2.96% at the moment. The last time yields were as high as she’s predicting, Bloomberg noted, was in 2011.
Watch the interview: