Goldman Sachs says relax: Global growth is still on track

The risk of a major slowdown to the German and Chinese economies are overblown and global risk assets still look attractive, according to economists at Goldman Sachs. The investment bank claimed in a note to clients Sunday that there was a “bright picture” for perceived riskier investments if near term events such as Brexit and the U.S.-China trade war can be successfully negotiated.

Markets sold off sharply Friday after poor German data set in motion a consensus that a global slowdown was imminent. The spread between the three-month U.S. Treasury bill and the 10-year note turned negative on Friday — the first time this has happened in more than a decade. Investors consider this to be a signal that a recession may be coming.

The economists added that while pressure on German manufacturing was valid, easy fiscal conditions and a strong labor market pointed to a coming upturn in fortunes. The analysts put the sudden change down to the end of the government shutdown, seasonal factors as well as an improvement in the underlying picture. The note was released too early to consider any impact of the Mueller report’s findings.

Goldman Sachs says relax: Global growth is still on track, CNBC, Mar 25