Markets have spent much of autumn caught between nerves and relief, and Goldman Sachs thinks that tug-of-war could define the months ahead.
After a spell of optimism that the US economy might cruise into 2026 in decent shape, investors were jolted last week by renewed US-China trade tensions.
Those worries briefly knocked risk appetite, but Goldman argues they may already be fading.
The longer markets go without a genuine shock, from trade or a weakening jobs market, the more likely investors are to refocus on the possibility of stronger growth.
The bank’s analysis of recent price moves suggests investors have processed the tariff noise as a small downgrade to US growth expectations, around 0.3 to 0.4 percentage points, and a minor uptick in rate expectations.
That combination, softer growth but stickier inflation, tends to unsettle equities and push yields lower, while prompting a mild retreat in the dollar.
Gold rises, oil falls, and riskier assets such as emerging market equities or the Australian dollar typically bear the brunt.
In Goldman’s view, two distinct types of “worry” are in play. The first is a straightforward US slowdown, perhaps triggered by a softening labour market, which would likely bring lower bond yields and a weaker dollar.
The second, the “tariff worry,” carries a different mix of inflationary and growth effects, leaving markets less confident about deep rate cuts and more cautious toward China-exposed assets.
But there’s an upside scenario too. If the feared shocks fail to land, growth optimism could resurface, a shift Goldman thinks would most clearly lift equities.
The key variable will be how markets interpret that growth. If investors assume the US Federal Reserve stays dovish despite firmer data, risk assets could enjoy a tailwind.
If, instead, stronger growth revives worries of tighter policy, bond yields could rise and shares might find less support.
Either way, Goldman sees the recent bout of nerves as having opened some “fresh room for growth relaxation” (market-speak for the possibility that the next move may be up rather than down). For now, investors are left watching whether that fragile calm can hold.