Productivity Rush Vs Pushed-Out Rate-Cuts

Goldman Sachs Partner Mark Wilson argues that AI-led productivity gains are the primary force sustaining equity markets, even as Fed rate cut expectations shift to late 2026. The report highlights emerging risks in UK yields and a historic shift in Emerging Market index weights towards Taiwan.

Key Takeaways

• 1.The AI-led innovation cycle is driving productivity gains that support equity markets despite high interest rates and delayed Fed rate cuts.
• 2.Taiwan has overtaken China as the largest constituent in the MSCI Emerging Markets Index, driven largely by TSMC's 57% weight within the country's allocation.
• 3.UK 10-year Gilt yields have surged to multi-decade highs, surpassing levels seen during the 2022 Truss administration, fueled by political leadership instability within the Labour party.

Table of Contents

• Introduction: Amazon IPO Context
• The AI Innovation Cycle and Capital Allocation
• IPO Market Trends
• Market Indicators: Risk Appetite and Momentum
• Global Market Shifts: Taiwan and MSCI EM
• Yields and Political Risk: UK Focus
• Fiscal Spending and Sector Observations
• Jan Hatzius: Bending, Not Breaking - Productivity Gains

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