Market Pulse – March 2023

March 16, 2023

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We are excited to share these insights from our colleagues at Goldman Sachs Asset Management’s Strategic Advisory Solutions, highlighting some of the latest issues and trends in the financial markets.

If you’re wondering where the economy and markets may be heading these days, here are some things to know:

Are housing costs still rising rapidly? If we look at the CPI (Consumer Price Index) figures, shelter inflation remains sticky. But that could be due to the way they measure prices rather than actual pricing. CPI captures rent on both new and renewal leases. Renewal leases are still catching up to market rates, pushing the numbers higher month to month, even while new leases are already decelerating.

China comes back to the global table, hungry. As the China’s economy recuperates fully, more spending by the Chinese will likely help global GDP. Global growth could be boosted 1% in 2023 through increased demand for imported goods, especially from the Asia-Pacific region; foreign services, such as travel; and oil.

Speaking of inflation, supply chain improvements will most likely offset the inflationary influence of this renewed demand.

Watching every move you make, Fed. Based on strong GDP growth and persistent inflation, our Global Investment Research analysts now expect the Fed to announce three more 0.25% hikes this year, to reach an ultimate Fed funds target rate of 5.25%-5.50%.

To market, to market… The macro economy still has a part to play in equity pricing, but investors seem to be paying more attention to company specifics lately, meaning stocks are less likely to move in lockstep.

As for bonds, recent rate hikes and the expectation of more to come has some bond investors fearing 2023 will look like 2022. However, significantly higher starting yields this year may offset substantial risks of rate increases.

This article is for informational purposes only and shall not constitute an offer, solicitation, or recommendation to buy or sell securities, or of an account type, securities transaction, or investment strategy. This article was prepared by and approved by Marcus by Goldman Sachs® but is not a description of any of the products or services offered by and does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA and Goldman Sachs & Co. LLC are not providing any financial, economic, legal, accounting, tax or other recommendation in this article and it is not a substitute for individualized professional advice. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, Goldman Sachs & Co. LLC are or any of their affiliates, none of which are a fiduciary with respect to any person or plan by reason of providing the material or content herein. Neither Goldman Sachs Bank USA, Goldman Sachs & Co. LLC nor any of their affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.