Written by: Rita

In August, the U.S. non-farm employment increased by 162,000, far exceeding expectations, and the unemployment rate remained at 4.1%. This report raised the probability of an interest rate hike in September, despite the White House's public call for rate cuts. The most unusual signal from the market comes from gold, which continues to rise despite the ongoing increase in the real yield of 10-year U.S. Treasuries. On September 7, Goldman Sachs released the GOAL monthly asset allocation report, stating that the cyclical rotation of the summer is still continuing but has slowed down, with commodities leading cross-asset performance, and European natural gas and refined oil prices rising significantly due to tensions in the Strait of Hormuz.

Significant changes have occurred in the leadership of stock market sectors. The momentum factor has significantly retreated, with funds rotating from technology stocks to non-tech and defensive sectors. Energy leads the pack while financial and healthcare remain the strongest non-energy sectors. Global sovereign bonds have been sold off, with long-end yields approaching post-global financial crisis highs, primarily driven by real yields and term premiums. Goldman Sachs believes that strong nominal growth, fiscal concerns, and the crowding-out effect of AI-related debt issuance have jointly pushed up bond yields.

Non-farm Employment Exceeds Expectations, Hike Probability Increases

In August, non-farm employment added 162,000 jobs, significantly surpassing market expectations. Data from previous months were also revised upward, and the unemployment rate remained stable at 4.1%. This report strengthened market expectations for a September rate hike, while the White House publicly expressed a desire for rate cuts.

This week, market focus will shift to the U.S. PPI and CPI data, as well as policy decisions from central banks such as the European Central Bank. Goldman Sachs economists expect the month-over-month growth of core CPI and PCE to be around 0.2% in August, with no rate hike expected, and uncertainty surrounding the policy path has significantly increased. The market pricing for a September rate hike has risen from 30% to just above 50%.

Commodities Lead the Way, Gold Strengthens Against the Trend

Commodities have been the most impressive asset class over the past three months. European natural gas and refined oil prices have risen significantly due to tensions in the Strait of Hormuz. Grain prices have also recorded significant increases, with agricultural commodities performing strongly overall. Goldman Sachs points out that if the "super El Niño" phenomenon continues, it will exacerbate supply risks concentrated in specific agricultural markets, especially sugar, which may raise food price inflation. For European natural gas, a mild winter could help alleviate gas storage pressures.

Gold is the most notable unusual signal. Traditionally, gold has a negative correlation with the real yield of U.S. Treasuries, but this time, gold prices have risen even as real yields increased. Goldman Sachs believes that the U.S. Treasury's intervention in the foreign exchange (yen) and long-end Treasury markets has increased demand for safe-haven assets such as gold, Swiss francs, and Bitcoin. Goldman Sachs has upgraded its allocation to gold from neutral to overweight, with a 12-month target price of $5,275 per ounce, implying about 19% upside potential.

Stock Market Rotation Slows, Momentum Factor Retreats Significantly

The core feature of the summer stock market rotation has been the significant retreat of the momentum factor. Previously crowded long positions in technology stocks faced substantial liquidations, with funds shifting towards energy, financials, and healthcare sectors. The S&P 500 has maintained a range-bound trading pattern, with significant changes in leadership beneath the surface.

Goldman Sachs global equity strategist Peter Oppenheimer noted that earnings growth is spreading from AI infrastructure to a broader range of industries. During the second quarter earnings season, median earnings per share growth for S&P 500 companies was 14%, and excluding AI infrastructure, other stocks achieved the highest earnings growth in this cycle. Market breadth is improving, which is the core logic supporting pro-cyclical allocation.

Goldman Sachs maintains an overweight recommendation for U.S. stocks, Asia-Pacific excluding Japan, and the Japanese stock market, while underweighting Europe. The 12-month target price for the Asia-Pacific ex-Japan index is 1,120 points, implying about 26% total return potential. The target price for the Japanese Topix Index is 4,600 points, implying about 12% upside potential.

Bond Yields Rising, Credit Spreads Narrowing

Global sovereign bonds faced selling during the summer, with long-end yields approaching post-financial crisis highs. Goldman Sachs points out that the rise in yields is primarily driven by real yields and term premiums, rather than inflation expectations. The yield on the 10-year U.S. Treasury rose from 4.3% at the end of June to around 4.8%. Goldman Sachs expects the 10-year U.S. Treasury yield to fall back to 4.26% within 12 months, providing about 6% total return.

In terms of credit bonds, both U.S. investment-grade and high-yield bonds are recommended for being overweight. As yields rise, credit spreads continue to narrow, indicating strong corporate fundamentals. Goldman Sachs estimates the total return for U.S. investment-grade bonds to be about 9.5% over 12 months, with high-yield bonds at about 7.6%.

Asset Allocation Recommendations

Goldman Sachs maintains a pro-cyclical allocation framework under the current macro environment. For equity assets, overweight U.S. stocks, Asia-Pacific excluding Japan, and the Japanese stock market, and underweight Europe. For bonds, overweight U.S. and German government bonds, underweight Japanese government bonds, and overweight U.S. investment-grade and high-yield credit bonds. Among commodities, overweight gold, and neutral on oil and copper. In terms of currencies, the dollar remains supported under rate hike expectations, while the euro faces downward pressure.

Goldman Sachs' allocation logic is as follows: strong nominal growth continues to support risk assets, while the rise in yields and energy prices is increasing cross-asset volatility. Gold's strength in rising yields is an important signal of a change in market narrative, indicating that when safe-haven assets no longer follow traditional pricing rules, deeper changes are happening.

Disclaimer

This article is a整理and interpretation of third-party brokerage research reports (Goldman Sachs, September 7, 2026) by潮向研究and is based on整理public market information. The ratings, target prices, earnings forecasts, and related judgments quoted in the text are the views of the analysts of that brokerage, representing only the stance of their affiliated institutions, and do not represent the views of潮向研究, nor do they constitute any investment advice.

The market is risky, and decisions should be made independently. This article should not be used as a basis for buying or selling any securities.