Goldman Sachs says they remain broadly pro-risk, but "there is more vulnerability to shocks"

An an brief summary of Goldman Sachs views, the analysts say they remain broadly pro-risk (OverWeight equities, Neutral credit, UnderWeight bonds)

• We have moved up the risk curve since the summer of last year and since then, especially post the US elections and vaccine news in Q4, positioning and growth pricing have turned much more bullish.
• Reflation optimism has picked up materially YTD, supported by US fiscal stimulus and a rally in commodities.
• Our economists remain above consensus for global growth and procyclical assets are not yet fully reflecting the strong recovery we expect in our view.
• With more optimism the asymmetry for adding risk is worse and there is more vulnerability to shocks - our Risk Appetite Indicator (RAI) is at elevated levels.

• Stronger growth momentum should support risk appetite but risky asset returns are likely to slow
• After strong growth momentum in Q2, a transition to a 'Goldilocks' scenario, with growth still robust but the bond sell-off easing, is most consistent with our forecasts.
• risks around our base case have increased: the bond sell-off has driven indigestion for risky assets and growth might disappoint, eg. due to longer lockdowns such as those in Europe.