fsi

Goldman Sachs Reports Market Stress: What's Happening Now

The Stock Market Shakeout (February 2026)

#GoldmanSachs flagged significant volatility beneath the surface of the US equity market in early February 2026. Shawn Tuteja, who oversees ETF and custom basket volatility trading at Goldman Sachs Global Banking & Markets, discussed these moves and where opportunities may lie , recorded on February 9, 2026.

The Inflation Disconnect Driving Fear

Goldman Sachs Chief Economist Jan Hatzius warned clients this February of a widening "inflation disconnect." While #CPI data suggested cooling inflation near 2.4%, the Fed's preferred measure , core PCE , is tracking at a much hotter 3.05% for January, prompting a major repricing of the 2026 rate-cut path. Rather than a spring cut, markets now expect the Fed to hold rates steady until summer 2026.

Elevated Valuations Fuelling Volatility Risk

Market stress is compounded by alarming valuation extremes: the Buffett Indicator has reached a record 223% of GDP, while the CAPE ratio stands at 39.9 , the second-highest in 150 years. The "February flash crash" demonstrated how fragile markets have become when valuations are stretched this thin.

Goldman's Financial Stress Index (FSI)

Goldman Sachs launched its daily Financial Stress Index (#FSI ) to track market stress in real time. The FSI monitors expected #volatility interest rate differentials, Treasury swap spreads, and credit and equity funding costs , offering policymakers and investors timely signals of emerging risks without waiting for monthly updates.

What Goldman Sachs Advises

Goldman's warning serves as a reminder that the path to 2% inflation is rarely linear. For investors, the coming months will require a focus on "margin of safety" and pricing power ,companies that can navigate high input costs while maintaining growth will be the key differentiators in a "higher for longer" environment.

Financial Stress Index vs S&P 500, No Clear Warning Signal

Markets continue to ignore short-term warnings. Despite occasional increases in the OFR Financial Stress Index (FSI), the overall trend for the S&P 500 stays strong and upward. Recent changes in stress do not indicate a sustained negative trend. Historically, spikes in stress have come before market corrections, but currently, the signals are unclear.

Impact:
Traders may remain cautious, but they are not pessimistic. Without a clear rise in stress, a positive sentiment can continue. However, a sudden increase in stress later could quickly change this sentiment.

Market Outlook:
Neutral to mildly positive, as the momentum supports equities unless stress rises sharply.

#Index #RSI #Binance #FSI