market monitor

Market Monitor Chart of the Week: Rate Risk Equities 3.0% Nominal Yield Real Yield

S&P 500 1-Month Return (%) One of the clearest potential risks to US equities 2.0% today is a sharp rise in yields, which could weigh 1.0% on growth and compress valuations. Historically, it 0.0% has taken a fairly large move in yields to trigger a -1.0% meaningful equity market sell-off, specifically a 2+ -2.0% standard deviation move in the 10-year rate over -3.0% 1 month, roughly 40-50 bps for nominal yields -4.0% today. In our view, we are unlikely to see such -5.0% sharp increases in yields given easing inflationary <-2Z -1Z to -0.5Z to 0 to 0 to 0.5Z to 1Z to >2Z pressures, and we expect US equities to continue -2Z -1Z -0.5Z 0.5Z 1Z 2Z rallying on the strength of the US economy and Z-Score of Interest Rate Change (1-Month Change in 10Y Rate vs Past 3 Years) corporate earnings. Source: GS Global Investment Research and GS Asset Management. As of July 10, 2026.

SAS Market Strategy Market Summary Economic Summary Global Equities: US equities fell last week amid investor concerns Monetary Policy: The minutes to the FOMC’s July meeting noted about rising oil prices and US Treasury yields. A massive debt that while “most” participants supported the decision to maintain buyback operation by the Treasury Department was not enough to the target range for the fed funds rate at 3.5-3.75%, “several” allay worries, with the S&P 500 ending the week down –1.39%. The participants favored a rate hike at the July meeting. While sell-off in global bonds weighed on equity indices across the world. participants judged that inflation risks were skewed to the upside, The STOXX 600 fell for seven straight sessions through Thursday – “most” participants expected inflation to fall over the remainder of its longest such streak since 2023. It ended down –0.53%. the year. Our forecast is for core PCE inflation to slow to 2.9% by Japanese equities declined after second-quarter GDP growth was December. We expect the combination of softer July employment weaker than consensus expected, with the TOPIX ending the week and inflation data and our forecast for benign monthly inflation down –3.10%. readings over the coming months to keep the FOMC on hold in what remains of 2026. Fixed Income: With global bond yields hitting their highest levels in years, US Treasury Secretary Bessent announced that the Inflation: UK CPI rose from 2.6% YoY in June to 2.9% in July, in line Treasury Department would double its debt repurchases from with expectations, as higher household energy costs pushed $2bn to at least $4bn during this quarter. US Treasury yields fell headline inflation upwards. Core CPI held steady at 2.6%, while after the announcement but subsequently rebounded, with the 2- services inflation eased to 3.4%, suggesting underlying price Year and 10-Year yields ending the week up at 4.24% and 4.73%, pressures remain more contained than the headline figures would respectively. The 10-Year German Bund yield ended up at 3.26%, imply. its highest level in 15 years, on inflation concerns and rising Activity: The US S&P Global Services PMI rose from 54.6 in July to government debt issuance. 56.8 in August, a near-two-year high and well above consensus Commodities: Oil prices rose last week after the US-Iran ceasefire expectations of 54.0. By contrast, the Manufacturing PMI eased expired, President Trump threatened to bomb Oman, and from 53.9 to 53.2. Japan’s economy grew by 0.3% QoQ in Q2, Secretary Bessent said that the US would impose the toughest below market expectations of 0.5%, reflecting weaker domestic sanctions in history on Iran. WTI and Brent Crude ended up at demand. Chinese industrial production growth fell from 5.3% YoY $87.06 and $94.39/bbl, respectively. Gold surged after the US in June to 4.5% in July, below expectations of 5.0%, while retail Treasury Department’s buyback announcement reignited interest sales growth slowed from 1.0% to 0.6%, pointing to softer in gold as a hedge against currency depreciation. A weaker dollar domestic momentum. In the UK, the manufacturing PMI eased also boosted gold prices, which ended at $4,603.07/troy oz. from 51.9 in June to…