2026 GLOBAL RATES OUTLOOK Disinflation Dampens Duration Risks George Cole +44(20)7552-1214 | george.cole@gs.com Goldman Sachs International 6 January 2026 | 5:01PM GMT Economics Research William Marshall +1(212)357-0413 | william.c.marshall@gs.com Goldman Sachs & Co. LLC Bill Zu +1(212)357-8230 | bill.zu@gs.com Goldman Sachs & Co. LLC Simon Freycenet +44(20)7774-5017 | simon.freycenet@gs.com Goldman Sachs Bank Europe SE - Paris Branch Friedrich Schaper +44(20)7774-7906 | friedrich.schaper@gs.com Goldman Sac ...

31 December 2025 | 12:58PM EST Economics Research Global Economics Wrap-Up: December 31, 2025 Global Economics 12/31/25 10:42AM ET US Economics 12/31/25 12:00PM ET Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Joseph Briggs +1(212)902-2163 | joseph.briggs@gs.com Goldman Sachs & Co. LLC Andrew Tilton +852-2978-1802 | andrew.tilton ...

Summary of Key Points from J.P. Morgan Global Data Watch Industry Overview - The report discusses the global economy, highlighting a growth trajectory that is above potential, with GDP expected to exceed forecasts in the upcoming quarter [1][2]. Core Insights and Arguments - **Economic Growth vs. Labor Market**: There is a noted tension between strong output growth and soft labor markets, which is unsustainable without either increased hiring or a slowdown in growth [1]. The expectation is for a rebound in hiring, supported by consumer spending and fiscal/monetary policies, leading to a more balanced economic expansion in the first half of 2026 [1]. - **Global Composite PMI**: The J.P. Morgan global composite PMI indicates a potential annualized GDP growth of nearly 3%, which is over a percentage point stronger than previous projections [2]. The manufacturing PMI suggests a 1.3% annual rise in global industry, with a positive trend in orders relative to inventories [2]. - **Business Spending**: Mixed signals are present regarding business spending, with U.S. Fed regional surveys showing an uptick in capital expenditure, while the global investment goods PMI fell below the neutral mark [3]. This has led to a stall in the global capex nowcaster for the first time since the beginning of the year [3]. - **Employment Trends**: The global employment PMI has decreased, indicating weak job growth, particularly in the U.S., where a significant drop in private hiring was reported [10]. However, a decrease in unemployment insurance claims is a positive sign [10]. - **Consumer Spending**: Real consumer spending in the U.S. was softer than expected, with a flat report for September and a downward revision for August [11]. Despite this, there were rebounds in Chase card data and auto sales in October and November, indicating some resilience [11]. - **Central Bank Policies**: The report anticipates a variety of outcomes from central banks as the global easing cycle concludes. Expectations include one rate hike, eight cuts, and twelve holds by year-end [13]. The Fed is expected to signal a cautious approach to future cuts, while the Bank of Japan is anticipated to hike rates due to fiscal policy changes [16]. Additional Important Insights - **Euro Area Resilience**: The Euro area shows signs of resilience, with upward revisions to PMI and GDP growth, indicating a growth rate of 1.6% annualized [18]. Despite trade war impacts, fiscal easing in Germany is expected to bolster growth [18]. - **China's Economic Signals**: China's PMIs suggest a year-end recovery, with positive signals from new export orders and construction PMIs, although services have softened [21]. The forecast for GDP growth in Q4 is 3.0% quarter-over-quarter [21]. - **Trade Agreements**: The status of the USMCA renewal is uncertain, with potential delays in legislative approval until 2027, despite expectations for a preliminary agreement [23]. This summary encapsulates the key points from the J.P. Morgan Global Data Watch, focusing on the global economic outlook, labor market dynamics, consumer spending trends, and central bank policies, while also highlighting regional insights and trade considerations.

Israel’s central bank is set to lower interest rates on Monday for the first time in almost two years https://t.co/m4WEw0xUxR ...

Malaysia is poised to keep its benchmark interest rate unchanged on Thursday, with stable growth, benign inflation and a strengthening ringgit allowing the central bank to preserve policy ammunition https://t.co/P0NdguTczs ...

Brazil’s central bank unveiled a new set of rules for financial institutions on Monday https://t.co/FsnFlddFnY ...

China’s central bank appears to be taking a more assertive stance in its push to expand the yuan’s role in the global monetary system https://t.co/6QPpAWpldt ...

Why is gold up. Gold is up because there are many more net new buyers. Who is the most important net new buyer.It's Tether. Tether has been issuing a stable coin called Tether Gold where they'll actually custody the gold on your behalf and volumes of it are rising. At the same time, central banks are rebalancing.And then yet at the same time, you have a lot of macro funds that have essentially decided that central banks aren't to be trusted and they don't know what to do. And so they're not necessarily long ...

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **global economy** and the impact of **US tariffs** on international trade and inflation dynamics. Core Insights and Arguments 1. **Global Economic Growth**: The global economy has shown resilience, with growth slowing to 2.5% in the first half of the year, down from nearly 3% last year. A further slowdown to below 2% is expected in the second half, with a rebound to nearly 3% anticipated in the first half of next year [1][18]. 2. **Impact of US Tariffs**: US tariffs have created uncertainties, but their restraining effects have been slow to emerge. Recent months have seen a decline in US imports and a retreat in foreign exports, indicating that the effects of tariffs are beginning to be felt [2][17]. 3. **Central Bank Policies**: A majority of global central banks are expected to continue cutting rates, with 21 out of 30 major central banks projected to cut by year-end. The Federal Reserve is likely to cut rates in September due to a softer labor market [3][32]. 4. **Surge in Tariff Revenues**: US tariff revenues have increased significantly, surpassing $330 billion annually in July, compared to $75 billion last year, reflecting an effective tariff rate of 11% [4][46]. 5. **Tariff Absorption by Firms**: US firms are currently absorbing 60-70% of the tariffs, but this is not expected to be sustainable long-term. Firms may increasingly pass these costs onto foreign suppliers and US consumers [5][63]. 6. **Inflation Dynamics**: Headline inflation remains near 2%, but core inflation is running higher than pre-pandemic levels. The tariffs are contributing to stagflationary pressures in the US, while they may exert downward pressure on wages and prices globally [22][24]. 7. **Sectoral Impact of Tariffs**: The tariffs are expected to affect various sectors differently, with foreign exporters potentially absorbing some costs, while US consumers may face higher prices. Evidence suggests that consumers have borne approximately 30-40% of the tariff costs to date [48][53]. Additional Important Insights 1. **Global PMIs**: Global Purchasing Managers' Index (PMI) data indicates that services are outperforming manufacturing, with the services PMI recovering to favorable levels while manufacturing PMI hovers around the expansion-contraction threshold [8][11]. 2. **Trade Dynamics**: The expected reduction in US demand for foreign products due to tariffs has not yet fully materialized, as US imports surged late last year. However, recent trends show a decline in imports, suggesting a shift in trade dynamics [12][16]. 3. **Future Projections**: The likelihood of severe downside risks to the global economy is diminishing, but the potential for more powerful downdrafts from tariffs remains a concern [18][39]. 4. **Sectoral Tariffs**: The overall US tariff rate is currently around 18%, with expectations that it could exceed 20% with additional sectoral tariffs on pharmaceuticals and electronics [42]. This summary encapsulates the key points discussed in the conference call, highlighting the current state of the global economy, the implications of US tariffs, and the responses from central banks and various sectors.

Market Trends & Geopolitical Uncertainty - Chip stocks are moving lower due to potential US government equity stakes, raising governance concerns similar to those seen with Chinese companies [1][2] - Geopolitical uncertainty, including tariffs and the Russia-Ukraine war, contributes to market nervousness [6][11] - Investors are nervous about the geopolitical landscape and equities [11] Central Bank Policy & Inflation - Central bank policy, particularly in the US, is a key factor influencing market sentiment, with expectations of a potential 25 basis point cut being closely watched [4][7] - Inflation remains a concern on both sides of the Atlantic, with the US Federal Reserve expected to maintain a "higher for longer" stance despite White House pressures [7] - The base case for the Fed is a rate cut in September, but no further moves are expected for the next 3 to 6 months, which could negatively impact high-growth names [8] Profit Taking & Market Rotation - Profit-taking is occurring due to market concentration and geopolitical uncertainty, intertwined with concerns about central bank policy [5][9][10] - There's a rotation away from high-valuation tech names, including the Mag 7 and the Ark Innovation ETF, with companies like Palantir entering correction territory [4] Investment Strategy & Global Allocation - The US market looks "toppy" and uncertain, leading to a potential "best of the rest" trade, favoring markets like the UK and Europe [12] - Despite concerns about the UK economy, the FTSE 100 offers compelling businesses with low debt levels and attractive yields [15] - While UK inflation is rising (38% yesterday, expected to rise to 4% in September), the equity market is decoupled from the economy due to international revenues [14][16]