Goldman Sachs FICC and Equities

With 75bps of interest rate cuts behind us, what’s the outlook for the Fed ahead of the December FOMC and beyond? Global Banking and Markets’ Tony Pasquariello and Josh Schiffrin, as well as Goldman Sachs Research’s Dominic Wilson, discuss the state of the global markets post the US election. Listen to the full discussion on the latest episode of The Breaks of the Game, now on YouTube: https://ms.spr.ly/6048Wtcg8

“Delivering a distributed technology solution to a wide cross-section of financial market participants has the potential to redefine market connectivity, infrastructure composability, and to deliver a new suite of commercial opportunities for the buy- and sell-side. We view this as an important next step for our industry as we continue to build-out our digital asset offerings for our clients,” Mathew McDermott, Global Head of Digital Assets, on the planned spin-out of the firm’s digital assets platform, GS DAP?. ? Read more: https://lnkd.in/eydH-xt8?

Investor optimism is at multi-year highs, with US equities expected to outperform the rest of the world this year. Are markets getting too complacent? “Strong consensus is often a driver of trends, and seldom a catalyst for reversals. But one-sided markets could be a sign of potentially unrealistic expectations, increasing the risk of rush exits,” writes Global Banking and Markets’ Oscar ?stlund. See the highlights from our November institutional investor survey below and view the full results here: https://ms.spr.ly/6047WmiV9

The post-election volatility reset has kicked of a rally in US equities. How long can this rally last? ?? “The green light has been turned on for risk managers, and we expect the rally to extend beyond this year,” writes Global Banking and Markets’ Scott Rubner. Clients can access the full report here: https://ms.spr.ly/6044WiZeo

"We've seen clients engage on trades that worked following the 2016 election, which were long banks, long technology, long energy stocks. And if you look at 2016 as a playbook, the market rallied 2% the day after the election. And between mid-November and mid-December in 2016, we rallied another 3.5%. Which, given where the S&P is right now, would put us right around 6,100." Global Banking and Markets' Brian Garrett joined Allison Nathan and Christian Mueller-Glissmann of Goldman Sachs Research to discuss the medium- and longer-term market implications of the election outcome. See the episode here: https://ms.spr.ly/6047Wwqcd Clients can access our global US election coverage here: https://ms.spr.ly/6048Wwqce

Amid mixed economic data and US election uncertainty, what are the expectations ahead of this week’s Federal Open Market Committee meeting? ?? “The desk thinks that it will be very hard to derail the Fed from delivering two further 25bps cuts this year,” notes Global Banking and Markets’ Richard Chambers. “The Fed is on a defined path of normalization and getting off restrictive levels, so a slowdown in pace would be more likely in 2025, as a response to a potential uptick in inflation data. The market is already starting to price this scenario for the January meeting. That said, the market may price in a more aggressive pace of Fed rate cuts in 2025 in case of a Harris victory versus a Trump victory, as a knee-jerk reaction.” Clients can access the full note here: https://ms.spr.ly/6044Wn3dw

Investors are cautiously optimistic on the near term outlook for Brazil’s hedge fund capital raising environment, as local regulatory reforms are expected to open up new investment opportunities. This was a key takeaway from our 14th LatAm Prime Services Conference in S?o Paulo, hosted last month. The conference brought together industry leaders and market experts to discuss challenges, trends, and opportunities within LatAm’s hedge fund industry. Clients can access regular regional coverage from our desks here: https://ms.spr.ly/6047WMfgR

Hedge funds seem to be taking some chips off the table amid US election uncertainty, rapid rise in bond yields, and fading China rally. ?? That’s according to data from our Prime Insights and Analytics desk, which shows that hedge fund positioning is far from stretched levels. Clients can access the full report here: https://ms.spr.ly/6045WyhER Vincent C. Lin, CFA Erin Tolar Freddie Parker Kartik Singhal

As big tech earnings kick off this week, Tony Pasquariello, Global Head of Hedge Fund Coverage, believes there is scope for some of those names to positively surprise. Catch up with the latest episode of The Breaks of the Game: https://ms.spr.ly/6046m43zj

Investors expect equities to end the year on a high note, judging by the recent positioning trends. ?? The risk-on sentiment is driven in part by the positive seasonal set up, the possible volatility reset following the US Election Day, and the expected return of large equity buyers, according to Global Banking and Markets’ Scott Rubner. Clients can access the full report here: https://ms.spr.ly/6046m7O0m