Equity markets have yet to reflect the risks of a U.S. recession, and strategists at Goldman Sachs Group Inc.
Goldman’s Christian Muller-Grismann, Cecilia Mariotti and others’ models suggest a 39% chance of a U.S. economic growth slowdown over the next 12 months, but only an 11% chance is priced in by risk assets. %. “This increases the risk of further recession fears next year,” it said in a report Wednesday.
Deutsche Bank’s Binky Chadda said a recession would start, with the S&P 500 index falling 19% from current levels to 3,250 in the third quarter of next year, before recovering in October-December. expected.
The strategists’ views sound alarming after the stock market has rallied over the past two months on speculation that inflation will peak and lead to softening tightening by hawkish monetary policymakers.
Goldman strategists expect monetary policy brakes to soften next year, but slowing global growth will continue to put pressure on stock markets. “Given the high risk of recession and the uncertainty posed by growth and inflation, the risk premium for equities appears to be low,” the report said.