Medium to longer term fundamentals for China are strong in our view, driven by a combination of sustainable consumption-driven growth, innovation and ongoing reform. Private consumption will increasingly drive the Chinese economy as it shifts away from its reliance on exports. This structural shift is moderating growth in the near term, but is expected to drive more self-sustaining long-term growth. Favorable demographic drivers should continue to support consumption growth and technological innovation.

Following a sharp reset lower in valuations in 2018, particularly during this quarter, we think the early-2019 investment backdrop presents an opening to add exposure to high conviction views at attractive levels. We are overweight US investment grade and US high yield corporate credit, and in dedicated portfolios we are overweight European high yield.

The Midterm elections have put the municipal bond market front and center, at the nexus of state and local politics. The low likelihood of changes to the tax policy in a divided Congress will not have a material impact on munis, but GSAM’s Municipal Bond Portfolio Managers weigh in on the near-term and long-term trends that are shaping one of the world’s largest fixed income markets.

Monthly recap of global markets, thought leadership, and investment themes from across Goldman Sachs.

In our view, 2018 is unfolding much like a performer walking a tightrope. Risk is considerable, but manageable, and best addressed by balance, agility, and focus.