Fortune telling VI

What does GS expect for bonds next year?

A downturn in the economy, which will drag interest rates with it; and bonds to do quite well…       

"The economy will grow below trend, around 2 percent in
2007,” said Jan Hatzius, chief U.S. economist at Goldman in New
York. "The short end can rally somewhat more,” with the two-
year yield dropping to 4.5 percent at year-end.

…and base metals?

"While structural changes have pushed metals price ranges higher, we
believe a cyclical slowdown in demand will likely result in a modest
temporary surplus for most metal in 2007, with fundamentals likely
tightening once again in 2008," said the report.         

GS Bond outlook for 2007
Paris-based BNP Paribas, Goldman Sachs Group Inc., which is
the most profitable securities firm in history, and UBS are among
the biggest bulls for 2007.         

BNP, France’s biggest bank, expects 10-year notes to end the
year at 3.8 percent, for an 11.4 percent return. Zurich-based UBS
projects a 4.4 percent 10-year yield, for a 6.88 percent gain.
New York-based Goldman Sachs forecasts yields will end the year
at 4.6 percent, for a 5.41 percent return.         
      

"The economy will grow below trend, around 2 percent in
2007,” said Jan Hatzius, chief U.S. economist at Goldman in New
York. "The short end can rally somewhat more,” with the two-
year yield dropping to 4.5 percent at year-end.

GS Base Metals outlook for 2007
During 2007, GS expects a soft landing for the economy picking up at year’s end into a stronger 2008.

Goldman economists look for global real gross-domestic-product growth
to decline from 4.7% in 2006 to 4.1% in 2007, but then reaccelerate to
4.3% in 2008.

I would keep an eye… on gold.