Here are the latest market insights from the Goldman Sachs Wealth Management Investment Strategy Group (ISG).
In September, a sharp upward move in global bond yields weighed on equity markets across the board, sparing only a handful of sectors.
Here’s a recap of what happened in the market and economy in recent months.
Global equity markets pulled back in September. The S&P 500 slipped 0.3%, the MSCI EAFE fell 1.7%, and the MSCI Emerging Markets Index eased 0.5%.
Globally, nearly all sectors came under in September due to rising yields and renewed inflation worries. One exception has been the information & technology sector where robust AI capital expenditure and resilient corporate earnings shielded the tech sector from a higher discount rate—a strength that, given the sector's heavy weighting in both US and emerging market indices, helped cushioned broader total returns from deeper declines.
Global bond yields rose meaningfully in September with the US Treasury yield up by 53 basis points. ISG believes three forces drove the bond sell-off:
After two consecutive months of decline, the US Dollar Index (DXY) increased by 1.8% in September, pushing year-to-date gains above 3%. The forces behind this increase mirrored those driving the broader bond sell-off: exceptionally resilient US growth, a policy rate hike by the Federal Reserve, and renewed geopolitical concerns that benefited the greenback.
Recent US economic activity data were mixed. September’s labor market report was soft, with nonfarm payrolls below consensus at 27,000 jobs and the unemployment rate edging up to 4.2% from 4.1%. Meanwhile, high-frequency indicators point to a strong third-quarter GDP, driven in part by robust consumption.
On the inflation front, both core CPI and PCE came in above the Federal Reserve's target in August, partially driven by volatile services categories.
Looking ahead, while ISG expects core PCE to hover near 3.0% year on year in the near term, they anticipate monthly core PCE inflation will trend closer to target for the remainder of the year.
At its September meeting, the Federal Open Market Committee unanimously hiked rates by 25 basis points to a target range of 3.75%-4.00%, while Fed Chair Kevin Warsh signaled further tightening ahead.
ISG now expects another 25-basis-point hike in December, bringing the target range to 4.00%–4.25%, with rates subsequently holding steady through 2027. ISG’s projections remain below market pricing, of an additional 3 to 4 hikes, as they expect incoming inflation data to undershoot the Fed's projections
ISG continues to monitor developments in the Middle East and energy markets closely. ISG is tracking European gas storage levels, which remain well below their historical average. In October, attention will turn once more to central banks, with the Federal Reserve, European Central Bank, and Bank of Japan all scheduled to hold policy meetings.
ICYMI: Check out the Summer Review, Fall Preview Report, which recaps key economic and financial market news from the summer and outlines ISG’s perspectives for the rest of the year.
Forecasts refer to full-year average growth rates. Forecasts as of October 2, 2026. Sources: Investment Strategy Group, Goldman Sachs Global Investment Research, Haver Analytics, Bloomberg.
Expectations and forecasts are based on material assumptions which are subject to change and provide no guarantee of results. Past performance is not indicative of future results, which may vary.
Expected returns are estimates of hypothetical average returns of asset classes derived from statistical models. There can be no assurance that these returns can be achieved. Actual returns are likely to vary. These models are not a reliable indicator of future performance.
This material represents the views of the Investment Strategy Group (ISG) in Goldman Sachs Asset & Wealth Management (AWM) and is not a product of Goldman Sachs Global Investment Research (GIR). It is not research and is not intended as such. The views and opinions expressed by ISG may differ from those expressed by GIR, LP, or other departments or businesses of Goldman Sachs. Forecasts are estimated, based on assumptions, and subject to revision and may change as economic and market conditions change.
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