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September 2021

MARKET PULSE | September 2021

Macro Views


The spread of the Delta variant poses downside risk to reopening, though is likely more of a near-term setback. We believe the recovery remains intact, supported by higher vaccination and booster shots that may help keep hospitalization rates manageable through the fall. However, the bar to global immunity has likely risen, requiring 80-90% of the population with antibodies to meaningfully reduce virus spread. Read More

US Growth

The Delta-driven spending pullback and production delays reflect key hurdles to higher activity levels. Forward-looking indicators have seen activity move lower across restaurant reservations and travel, leading us to push back our expectations for a full consumer spending rebound. Simultaneously, businesses are taking longer to rebuild inventories. Consequently, we have increased our growth estimates for Q4 and lowered expectations for Q3. On a full-year basis, we revised forecasts for 2021 and 2022 to 5.7% and 4.6% YoY. Read More


COVID-19 lockdowns abroad have again tightened US supply chains, most notably for durable goods impacted by the semiconductor shortage. While production constraints may be short-lived, we still expect inflationary pressures in the near-term and have upgraded our 2021 YE core PCE forecast to 3.75%. Beyond 2021, a rebound in service activity and production normalization may be disinflationary, supporting our 2022 core PCE forecast of 2%. Read More

Monetary Policy

July’s FOMC minutes revealed that tapering of asset purchases may come as early as December at a pace of $15bn per meeting. While potentially imminent, today’s easy financial conditions offer ample room for markets to absorb tighter monetary policies before posing a challenge to risk asset performance. We think it may be a taper without a tantrum. Read More

Market Views

US Equities

Robust sales growth and record margin expansion led to strong Q2 earnings, with upside surprises in EPS and sales at record numbers and magnitudes. Looking to year end, we believe stellar Q2 earnings and the increasing weight of tech stocks will push the S&P 500 higher than previously forecasted, with our 2021 price target now at 4700 and EPS growth at +45%. Read More

Global Equities

China regulatory tightening, concerns about the Delta variant and uncertainty over Fed tapering have all contributed to the underperformance of the MSCI Asia-Pacific Ex-Japan Index in Q3. But despite the uncertain trading environment, we see grounds for a rebound over a 12-month horizon. The broad macro backdrop remains supportive for equities, corporate profits are strong, valuations have compressed meaningfully, and investor positioning is light. Read More

Global Rates

Sovereign yields have swung lower as Delta variant concerns weigh on growth expectations. We have revised our G10 yield forecasts lower, with YE 10-Year US Treasury and German Bund yields at 1.6% and -0.15%, respectively. However, we expect yields to grind higher in the coming months as variant concerns subside, reopening continues, and labor markets firm. Read More


Recent commodity weakness reflects demand-side concerns linked to near-term Delta variant impacts in emerging markets. We view this weakness as transitory, however, as we expect a structural underinvestment in supply to create persistent deficits that will push prices higher by year end. Read More


Deteriorating global growth expectations, solid domestic economic data, and hawkish Fed signals should support the dollar in the near-term, though we believe the dollar will eventually turn lower versus G10 currencies due to the global vaccine-shaped recovery, its countercylicality, and high valuations. Read More

Back to School ABCs

As we look toward the final third of 2021, it may be useful to revisit the basics of our investment framework in the present environment. We believe the economic expansion, coupled with improving profitability and supportive policy, will continue to be constructive for markets. As such, our ABCs for investing into year end include a commitment to 1) Allocating assets into tactical opportunities while maintaining a strategic plan, 2) Bottom up selectivity, and 3) Cash deployment into capital markets.


Following an impressive policy-fueled, vaccine-led recovery, we believe the US equity cycle is transitioning back to fundamentals. Going forward, we expect returns to be driven primarily by earnings. As earnings growth, valuations, and interest rates normalize, returns may moderate in 2022 and beyond. As such, we believe that an eye for selectivity when it comes to corporate profitability, balance sheet strength, and secular growth opportunities may benefit investors’ bottom lines.

Source: S&P Global, Goldman Sachs Global Investment Research, and Goldman Sachs Asset Management.

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