Declining inflation rates and consistent growth should create a solid background for stocks and other risky assets, even though some bouts of volatility are likely, according to Goldman Sachs.
Broadly speaking, a "soft landing [is] on track," the firm said in a client note in which Goldman market experts said they expect the Federal Reserve soon to make a nod toward an easing in monetary policy that also will be market-positive.
"The broad data still points firmly in the direction of easing inflation pressure and resilient growth, especially in the US," wrote Dominic Wilson, senior advisor in Goldman's Global Markets Research Group.
But we still think it makes sense to fade those pullbacks and expect US equities and credit to make new highs, as they have been."
"This week's FOMC meeting will need to remove the tightening bias to keep March alive, as the [Bank of Canada] did last week, but is unlikely to preview a March cut," Wilson wrote.
Persons:
Goldman Sachs, Goldman, Dominic Wilson, Wilson, Michael Bloom
Organizations:
Federal Reserve, Markets Research, Gross, Bank of, CME
Locations:
Bank of Canada