GOAL Kickstart

Latest edition · October 5, 2026

GOAL Kickstart Credit pressures drive sharp repricing of monetary policy factor

Goldman Sachs notes that its RAI PC2 'Monetary Policy' factor plunged to -8, driven by credit spread widening centered in European sovereigns. The team remains Neutral across asset classes on a 3-month horizon and maintains an Underweight on European equities and credit amid ongoing regional political and economic uncertainty.

Goldman Sachs Portfolio Strategy Research reports that its Risk Appetite Indicator (RAI) PC2 'Monetary Policy' factor fell to -8, its third-lowest level since 2000, as widening credit spreads—most notably in Euro Area sovereign debt such as France—exacerbated existing rate pressures. While European equity correlations to credit stress have spiked, US equity markets remain insulated. Historical episodes of similar PC2 drops show wide cross-asset return dispersion. Consequently, the team maintains a Neutral cross-asset view over 3 months, remaining Overweight Equities and Underweight Credit on a 12-month horizon while selectively underweighting European equities and EUR IG/HY credit. Tactical opportunities include front-end receiver swaptions and call options on rate-sensitive equities.

Key takeaways from the latest edition

• 1.The GS RAI PC2 'Monetary policy' factor fell to -8, the third-lowest level since 2000, as downward pressure extended from rates to corporate and sovereign credit.
• 2.Credit spread widening was most severe in Euro Area sovereign debt, notably France, spilling into European equities while US equity and credit markets remained resilient.
• 3.Goldman Sachs maintains a Neutral cross-asset stance over 3 months, while holding an Overweight on Equities and Underweight on Credit over 12 months, with specific underweights in European equities and EUR credit.

What this series covers

• Credit pressures drive sharp repricing of monetary policy factor
• Cross-asset: Forecasts
• Cross-asset: Weekly and YTD performance, absolute and risk-adjusted
• Cross-asset: Risk appetite indicator
• Cross-asset: Risk Appetite principal component analysis
• Cross-asset: Balanced portfolios and dynamic allocation strategies performance
• Cross-asset: Equity vs. credit monitor
• Cross-asset: Valuation and risk premia
• Cross-asset: Yields
• Cross-asset: Sentiment and Positioning
• Cross-asset: Global Funds Flows
• Cross-asset: CFTC positioning
• Cross-asset: Correlations: Equity vol/CDS, commodity prices/credit & FX, equity/bond, equity/FX
• Cross-asset: Correlation matrix
• Cross-asset: Implied and realised vol, call and put skew
• Cross-asset: Volatility, skew, CDS with equity vol, rate vol
• Cross-asset: Liquidity indicators
• Cross-asset: Market pricing of US recession risk
• Equity: Drawdown probability
• Equity: Valuation and styles
• Equity: Earnings
• Government bonds: Yield curves
• Government bonds: Real yields, inflation, breakevens, 10y IR differentials
• Commodities: Curve shapes and roll yields
• FX: Forecasts and forwards, recent performance and positioning

Edition archive

• GOAL Kickstart Credit pressures drive sharp repricing of monetary policy factor

  October 5, 2026

• GOAL Kickstart Benchmarking cross asset performance to continued rates repricing

  September 28, 2026

• GOAL Kickstart Markets repricing around higher rates and oil prices

  September 21, 2026

• GOAL Kickstart Summer rotation moderation with higher yields and commodities

  September 7, 2026

• GOAL Kickstart Focus on central bank meetings - from strong Tech earnings to higher rates

  June 9, 2026