Quarter-End Rebalancing Surges as Bond Selloff Diverges From Record-High Stocks

Analysts expect outsized portfolio rebalancing following the third quarter ended Sept. 30, 2026, after a steep bond selloff left target allocations severely skewed while equities hovered near record highs. Goldman Sachs projected U.S. pension funds alone would sell $33 billion in stocks around quarter-end to realign allocations and redirect proceeds into fixed income — a figure ranking in the 98th percentile of such estimates since January 2000. The 10-year Treasury yield posted its largest quarterly increase since the second quarter of 2009. Jordan Jackson, global markets strategist at JP Morgan Asset Management, said the quarter's rebalancing could be among the most significant historically given elevated volatility and the magnitude of drift from target allocations. Michael O'Rourke, chief markets strategist at JonesTrading, said the bond selloff presents an attractive buying opportunity, though he cautioned many managers may find rebalancing into a losing asset class difficult. BlackRock's Michael Gates said he is tilting model portfolios toward lower-risk equity and bond categories. Full flow effects are likely to surface in early fourth-quarter trading.