GOAL Kickstart Markets repricing around higher rates and oil prices

Portfolio Strategy Research 21 September 2026 | 8:21PM BST

Markets repricing around higher rates and oil prices

Last week, the Fed and the BoJ hiked policy rates by 25bps long-dated bonds, the U.S. Dollar and US IG CDS indices Christian Mueller-Glissmann, CFA (Japan policy rates are at the highest level in over 31 years), rebounded from the previous sell-off around the August | christian.mueller- while the BoE left rates unchanged. Brent crude prices RAI peak, while non-US equities, value vs. growth, cyclical Goldman Sachs International

moved back above 100$/bbl, in a convergence of supply vs. defensives and JPY have lagged (Exhibit 3). Global Alessandro Giglio | disruptions, escalating warfare, and refining constraints - it equities have modestly de-rated since the start of the Goldman Sachs International has moderated again today. This week investors will turn month (Exhibit 4), including cyclically-exposed sectors - Andrea Ferrario their attention to PMIs (US/Euro area), the US durable goods seeing little valuation support despite higher commodity | report and the meeting between President Trump and Xi prices. Credit has remained broadly resilient in this Goldman Sachs International

Jinping. environment, and our credit strategists expect AI-related Elena Porfidia | issuance to remain a larger headwind for cash vs. synthetic Front-end rates led the cross-asset repricing last week - G4 Goldman Sachs International credit. Rising energy and sovereign risks have also been front-end volatility rose ahead of the meetings, especially Peter Oppenheimer weighing on European risk premia, with TTF and the | relative to equity vol (Exhibit 1). The response was less OAT-Bund spreads moving higher in tandem (Exhibit 5). Goldman Sachs International pronounced at the back end, with long-end yields anchored by Treasury buybacks, markets still pricing a hawkish BoJ We remain neutral across assets for 3m and modestly trajectory and the UK’s gilt-friendly QT plan. The US 2s10s pro-risk for 12m (OW equities, N bonds/commodities/cash, curve is now at its flattest level since March 2025. UW credit). While global bond yields have risen sharply YTD, the tactical case for bonds relative to equities in Our Risk Appetite Indicator (RAI) has softened since its peak balanced portfolios remains mixed. Exhibit 6 shows the in August, before a small rebound last week to 0.8 (Exhibit most attractive hedge in a ‘rates-relief’ scenario (with our 10). The gap between ‘safe assets’ and ‘risky assets’ RAI RAI PC2 “Monetary Policy” component easing by 2 sd): calls components widened to its largest level since 2022, driven on credit (EM and corporate), bonds, Real Estate rank by the rise in nominal yields (Exhibit 2). Last week, among the most attractive hedges - however, we would

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also expect material relief for equities from both lower rates and oil prices. Receiver swaptions on front-end rates can provide a more convex hedge for rising recession risk, but also benefit from a potential relief in the event of lower energy prices.