Goldman Sachs signaled it will hold a tactically neutral positioning for the next three months while maintaining a modestly pro-risk stance over the following 12 months, according to a report published Tuesday.
The firm pointed to a stronger-than-anticipated US labor report released last Friday as a key near-term development. Nonfarm payrolls increased by 162,000 in August, employment growth was revised upward, and the unemployment rate remained unchanged at 4.1%. Goldman said those data lifted market odds of a September interest-rate hike, even as the White House has publicly urged lower rates.
Looking ahead, Goldman identified US producer price index (PPI) and consumer price index (CPI) releases, plus a series of central bank policy decisions - including the European Central Bank meeting - as the primary macro events that will shape markets this week.
Over the summer months, the firm observed a continuing procyclical rotation across global assets that was supported by stronger nominal growth, although the pace of that rotation has slowed. Commodities led absolute returns, with European gas and refined products posting notable gains amid geopolitical friction around the Strait of Hormuz. Agricultural markets also moved sharply, with grains among the largest cross-asset performers.
Goldman warned that a stronger-than-expected "Super El Nino" could add upside pressure to food prices by exacerbating supply risks in highly concentrated agricultural markets, with sugar specifically highlighted as vulnerable. At the same time, milder temperatures associated with such a weather pattern could ease pressure on European gas storage needs.
Within equities, broad indices stayed relatively range-bound but leadership shifted meaningfully. Energy was the top-performing sector, while Financials and Health Care were among the strongest non-energy sectors, according to the report.
Global sovereign bonds experienced a selloff as longer-dated yields moved toward levels last seen in the post-global-financial-crisis period, driven predominantly by higher real yields. Goldman attributed the spike in long-term yields to a combination of strong nominal growth, fiscal concerns and crowding out linked to large AI-related debt issuance.
The report included a snapshot of market moves across currencies, commodities, equity indexes and volatility measures. It noted that gold rallied despite higher US 10-year real yields, and that interventions tied to US Treasuries and foreign-exchange operations increased demand for safe-haven assets such as gold, the Swiss franc and Bitcoin. The South Korean won also showed a material rally in FX markets.
On volatility, single-stock implied volatility reached an extreme in mid-July, peaking at 2.9 times the implied volatility of the market, before beginning to normalize. Meanwhile the VIX remained relatively stable despite mounting macro headwinds.
For portfolio positioning, Goldman recommended blending global exposure to AI themes with high-dividend and low-volatility styles. After an August volatility reset, the firm identified several hedging strategies it views as attractive: Momentum collars, VIX call spreads, EUR/CHF put options, and put positions on Financials, Energy and TOPIX, alongside long calls on KOSPI.
Market snapshot (as reported):
- US nonfarm payrolls: +162,000 in August; unemployment rate steady at 4.1%.
- Commodities led returns over the summer, with European gas, refined products and grains showing strong performance.
- Global sovereign bond yields rose, with long-dated yields approaching post-GFC highs and real yields leading the move.
- Safe-haven demand increased for gold, the Swiss franc and Bitcoin amid Treasury and FX interventions.