Goldman: Rising Rate Anxiety Roils, But Supports Outlook For Inflows

Goldman Sachs note that their U.S. "Sentiment Indicator reveals stretched investor equity positioning that has likely exacerbated the recent market tumult in response to rising rates. However, equity fund inflows have remained strong, totalling a record $163bn over the five weeks since the start of February. Rising rates have historically been associated with equity fund inflows and investor rotation toward equities, particularly among U.S. households. In addition to higher rates, household cash allocations remain elevated, supporting demand for equities this year. We forecast households will represent the largest source of demand for U.S. stocks in 2021 ($350 bn). Corporate demand will also be strong ($300 bn) as rebounding buybacks outweigh surging issuance."