Investors should just relax, according to Goldman Sachs Group Inc.
Appetite for riskier assets such as stocks and high-yield bonds has been suppressed by a number of factors that have come up around the same time, but the headwinds may be transitory, according to the New York-based investment bank.
The firm’s economists point to the sideways movement in the S&P 500 Index since the early-February market meltdown as evidence that nervous traders are unwilling to take a stance.
“We see three reasons why risk assets should worry less,” Goldman economists Charles Himmelberg and James Weldon wrote in a note Thursday.
“First, we maintain our conviction in the strong outlook for global growth despite the recent dip in global activity indicators. Second, concerns over monetary tightening are likely overdone. Third, the technical headwinds that have weighed on risk sentiment look likely to ease,” they explained.
Global growth might have moderated in the first quarter, but the economists said the U.S. should soon start to show strength from the fiscal stimulus enacted in December, and China, Brazil and India continue to look strong.
And while markets have had to absorb a big change in Treasury yields, the bulk of the move is probably mostly done, they said.