While concerns of stagnation in global markets increased, Goldman Sachs and Bank of America shared pessimistic scenarios.
The aggressive interest rate hikes of the Federal Reserve continue to increase the fear of markets, while the history of inflation in the USA is circulating at the summits. The world’s leading investment banks Goldman Sachs and Bank of America shared their evaluations on the latest situation.
While Goldman pulled the year -end index for the S&P 500 index, Bank of America drew attention to bond sales and said that there was a huge decline in investor sensitive.
S&P 500 revision from Goldman
Goldman Sachs reduced the end -of -20 year target for the S&P 500 index to 3,600 points. The Bank reported that the Fed had seen very little sign that he would step back from the interest policy. Analysts wrote that the Central Bank’s interest policy was higher than the previous prediction.
Goldman Analyst David Kostin said, “Based on our customer talks, most of the stock investors adopted the view that a harsh landing scenario is inevitable, and focal points, the timing, size and duration of a possible recession, and investment strategies for this view”.
The FED recently made a third -relevant 75 basis -point interest rate hike and gave the message that the tightening of the markets will continue.
Kostin said inflation is more permanent than expected and that there is a low probability of showing net relaxation signs in the near term. This will lead to further rise in Fed’s tightening forecasts.
Portfolio executives, to control inflation to control the FED in 2023 at some point in the United States should increase high rates to lead to recession, he said.
BAFA drew attention to bond sales
Bofa said that the global state bond losses are on their way to becoming the worst year since 1949 and that investor sensitivity has fallen to its lowest level since the financial crisis.
Bofa recorded $ 6.9 billion output from the bond funds until Wednesday, while $ 7.8 billion has been withdrawn from stock funds and investors turned 30.3 billion dollars in cash.
In the note, investor sensitivity has been in the worst situation since the 2008 global financial collapse. Treasury returns, which moves in the opposite direction to bond prices, continued to rise after reaching its highest level since 2011 on Thursday. The US’s 10 -year indicator return was up to 3.76 percent.
Bofa wrote that the collapse of the bond threatens the liquidation of the world’s most crowded trade. It was said that investors face more inflation, interest rates and stagnation shocks, and that the bond collapse means that high credit margins and low stock levels have not yet been reached.
The aggressive interest rate hikes of the central banks to control inflation even if growth slowed down, made the world markets anxious and led to a new increase in bond returns this week.
Source:
https://www.reuters.com/markets/europe/goldman-sachs-cuts-2022-target-sp-500-by-16-2022-09-23/
https://www.reuters.com/markets/europe/global-markets-flows-urgent-2022-09-23/
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