Goldman Sachs expects the UK, Australia, Sweden and the Czech Republic each to raise rates by 25 basis points, while five other central banks hold rates steady; US nonfarm payrolls are expected to increase by 75 thousand in October, above the market consensus.
Morgan Stanley says concerns about returns on AI investment triggered by technology earnings weighed on US stocks and supported Treasuries. Meanwhile, Middle East supply risks pushed up oil prices, and noteworthy changes also emerged in European bond markets, the Bank of Japan and China’s monetary policy framework.
BofA’s relaunched real-time model estimates that the global economy grew at an annualized quarter-on-quarter rate of 3.7% in the third quarter of 2026, above the 3.4% aggregate forecast from its economists; emerging markets account for the bulk of the gap.
The Federal Reserve held rates steady, while the Bank of Canada has already raised them; Goldman Sachs expects further rate increases of varying degrees from central banks in the US, Europe, Japan and Canada. Meanwhile, US earnings have exceeded expectations, but returns on AI investment and the impact on employment remain market concerns.
The Federal Reserve held rates steady while the Bank of Canada raised them. Goldman Sachs expects the next rate hikes in both the US and Europe in December, while also monitoring the US midterm elections and returns on AI investment.
Fiscal easing and the AI boom have offset some of the impact of tariffs and the Middle East war, but Goldman Sachs believes renewed energy price increases, higher long-term interest rates and weakening AI-driven growth are putting downward pressure on global growth in 2027.
US stocks fell as Treasury yields declined. BofA believes markets are worried about whether AI investment can be converted into profits. Risk aversion raises the bar for a Federal Reserve rate hike in October, but the energy shock and underlying inflation still support further tightening; the European Central Bank is more likely to wait, while the Bank of England faces more immediate pressure to act.
