Goldman Sachs says stock investors appear confident the Federal Reserve can keep cutting interest rates without derailing growth, even as fiscal stimulus threatens to reaccelerate the economy into 2026.
By contrast, bond markets are signaling concern that U.S. employment could weaken sharply, with fixed income investors more focused on downside risks in labor data.
The bank said next week’s September employment report will be closely watched, with markets likely to react strongly to each release. “Going forward, economic data releases will be really important, and markets could be extremely reactive to them, since each print helps shed light as to whether the equity market or bond market is on the right side of this disconnect,” Goldman noted.
