GOAL Kickstart Summer rotation moderation with higher yields and commodities

Portfolio Strategy Research 7 September 2026 | 6:56PM BST

Summer rotation moderation with higher yields and commodities

US labour-market data surprised materially to the upside broadening into non-Tech and defensive areas. Energy led Christian Mueller-Glissmann, CFA last Friday: nonfarm payrolls increased by 162k in August, returns, while Financials and Health Care emerged among | christian.mueller- employment growth was revised higher and the the strongest non-energy sectors (Exhibit 2). Global Goldman Sachs International

unemployment rate was unchanged at 4.1%. The report sovereign bonds sold off as longer-dated yields Elena Porfidia | increased market expectations of a September hike, despite approached post-GFC highs, led by real yields (Exhibit 3). Goldman Sachs International calls from the White House for lower rates. This week, the The spike was driven by strong nominal growth, fiscal Andrea Ferrario focus will be on US PPI and CPI data and impending central concerns, and crowding out from AI-related debt issuance. | bank decisions, such as the ECB. Energy prices re-emerged as an important driver of Goldman Sachs International

cross-asset volatility again, potentially weighing both on Alessandro Giglio The procyclical rotation across global assets continued over | bonds and equities (Exhibit 4). the summer, supported by higher nominal growth, but it has Goldman Sachs International

slowed. Commodities led returns, particularly European gas Gold had a strong rally, despite higher US 10-year real Peter Oppenheimer | and refined products amid tensions around the SoH (Exhibit yields (Exhibit 5). As noted in our recent asset allocation Goldman Sachs International 1). Grains also had one of the largest cross-asset moves, update, US Treasury interventions in foreign exchange (Yen) alongside strong agricultural commodity returns. A stronger and long-dated Treasuries increased demand for safe “Super El Niño” could add to food-price inflation through havens like Gold, CHF, and Bitcoin. In FX markets, KRW also supply risks in concentrated agricultural markets, rallied materially. Single-stock implied vol reached a record particularly sugar, while easing pressure on European gas peak of 2.9x the implied vol of the market in mid-July storage if temperatures remain mild. before beginning to normalise; although markets continue to price high dispersion relative to index volatility into Broad equity benchmarks remained relatively range-bound, autumn, the VIX remains relatively anchored despite rising but leadership shifted materially beneath the surface. One macro headwinds (Exhibit 6). of the sharpest momentum factor unwinds supported a

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We remain tactically Neutral for 3 months, while modestly pro-risk over 12 months (OW Equities, N Bonds, N Commodities, N Cash, UW Credit). Healthy earnings growth should continue to support equities, although returns are likely to slow as growth and revisions peak. We recommend combining global AI exposure with high-dividend and low-volatility styles. Following the August volatility reset, attractive hedges include Momentum collars, VIX call spreads, EUR/CHF puts and puts on Financials, Energy and TOPIX alongside KOSPI calls.