GS Pasquariello markets macro 21 Aug 2026

GS Pasquariello - markets macro 21 Aug 2026 Pasquariello · Goldman Sachs · Managing Director, FICC & Equities Fri 21 Aug 2026, 7:02 AM ET

the layout: a market narrative / directional framework ... a set of short paragraphs on the key issues of the day ... and a handful of punchy charts.

it’s probably foolish to try and predict the path of the market these days, but I gave it my best shot anyway, so I’m a taker of feedback and good ideas.

i. superficially, this was supposed to be a quieter week, but there’s still no shortage of action in the shooting gallery.

ii. Wednesday’s UST buyback announcement -- fully discussed in point #1 below -- touched off a set of moves in the macro complex that put the trading community on their feet.

iii. for the past several weeks, S&P has been chopping around the 7700 level, which recalls the two months that it spent relentlessly chopping around the 7500 level.

iv. as was the case back then, consolidation at the index level of the market obscures the churn beneath it.

v. which is to say: after three weeks of relative calm, a violent seesawing of the momentum factor returned.

vi. tech remains at the center of this dynamic; witness these daily moves in our TMT momentum pair: Monday +5.7% ... Tuesday -9.1% ... Wednesday -8.9% ... Thursday unch, thankfully.

vii. in addition, the US equity market is wrestling with some challenges from other assets -- be it volatility in the back end of global bond markets or a fresh surge in energy prices.

viii. furthermore, for those who heed the lessons of market history, we’re approaching a trickier period where implied vols typically increase into the mid-term election (see the first chart below).

ix. set against those factors, nominal growth is strong, earnings are superb and flows remain supportive (namely buybacks and retail).

x. all taken together, the nuts-and-bolts of the current setup don’t skew conclusively in one direction, but I’m still inclined to think this is the sequence: a grind higher to early September ... then a few months of consolidation / retracement ... followed by a customary charge higher to end the year.

1. US rates. this week’s podcast features Mike Mitchell, who has a front row seat for what’s going on in the Treasury market: link. we recorded this conversation immediately after the buyback announcement and

spent most of the time unpacking it. my simple view: the declaration added ballast to USTs -- and it put the bears on notice -- but the market will intermittently worry about debt-and-deficits for a long time.

2. momentum. a stat that speaks for itself: YTD, our flagship momentum basket has registered 24 distinct 1-day selloffs > 5%; that is more than in the prior five years, combined. we added two more to that list this week -- so, while the fever broke in July, the day-to-day volatility continues to be very challenging. to compound that degree of difficulty, note there’s also been a significant shift WITHIN this factor (for example, software is now the largest weight in the LONG leg of our 3-month basket, while it’s also the largest weight in the SHORT leg of our 12-month basket). for some worthwhile reading on this topic: link.

3. US tech. after three straight up weeks -- and a move to within 2% of the highs -- NDX is 0-for-4 so far this week. as we saw following the Q4 reporting period (e.g. META) and the Q1 reporting period (GOOG, AMZN), excitement around AI capex ROI has already faded from the Q2 reporting period (MSFT, AMZN). looking ahead, the biggest stock on the planet reports earnings on Wednesday afternoon. with appreciation for that event risk -- and for the challenges of portfolio management when the momentum factor goes berserk -- I tend to agree with Pete Callahan that tech remains in a seam where fundamentals, technicals and valuation are still generally supportive.

4. flow-of-funds / positioning. coming into this week, GS PB reported three straight weeks of demand for global equities. within that mix, the US was bought every single day last week -- totaling the largest grab since March of 2020 (link). while that may sound like an aggressive re-risking, headline measures remain fairly middling: on a 1-year lookback across our…