Goldman Sachs expects support for risk assets in the months ahead from rates, oil prices

Goldman Sachs relatively rosy view on the US economy, DM central banks’ outlook, rates, oil and risk assets:

  • Although most forecasters still predict a recession, we think the runway for a soft landing is in sight.
    • US economic activity remains resilient,
    • the labor market rebalancing is making progress,
    • and the recent CPI and PCE data suggest that disinflation may now be running slightly ahead of schedule.
  • While DM hiking cycles are in their final innings—and the Fed is likely done—our rate views remain mostly hawkish to the forwards as we expect central banks to cut only gradually toward neutral in the absence of a recession.
  • We expect both long-term rates and oil prices to stabilize around their new, higher levels, helping risk assets regain their footing in the coming months.

Goldman Sachs is tipping only a 20% chance of a US recession in the next 12 months:

This article was written by Eamonn Sheridan at Source