Goldman Sachs warns: US market month-end stock-bond rebalancing is approaching, with $23 billion in stocks to be sold—significant pressure ahead!

Goldman Sachs warns: US market month-end stock-bond rebalancing is approaching, with $23 billion in stocks to be sold—significant pressure ahead!

```

As the end of the month approaches, Goldman Sachs trading desk models estimate that, influenced by the recent performance of US stocks and bonds, US pension funds need to sell about $2.3 billion worth of US equities. Meanwhile, it is estimated that an equivalent amount of funds will be used to buy bonds.

In the first week of April, the rebalancing scale was still negligible, with only $20-30 million expected to be sold. However, after the market surged on April 8, with the S&P 500 rising 2.5%, the estimated selling value jumped to $1 billion. This figure continued to climb as the market kept rising, finally stabilizing at around $2.3 billion.

Additionally, on April 10, there was a triggering event, with pensions estimated to have sold $2.1 billion in stocks that day—this amount is not included in the aforementioned month-end rebalancing estimate.

Where does this April rebalancing rank historically? According to Goldman Sachs’ calculations:

  • The $2.3 billion selling scale, by absolute amount: ranks at the 83rd percentile among all buy and sell estimates in the past three years, and at the 92nd percentile dating back to January 2000.
  • The $2.3 billion selling scale, by net amount: ranks at the 11th percentile in the past three years, and at the 4th percentile since January 2000.

Looking at asset class performance this month, US equities outperformed fixed income by 8.16%, S&P 500 total return +8.95%, 10-year US Treasury total return +0.79%.

Moreover, as CTA demand is fading, Goldman Sachs believes:

CTA-type buyers' demand has entered the eighth inning (approaching the end), even though they have been important drivers of the market in recent weeks. In this context, such a large-scale asset rotation poses significant pressure on the US stock market at a vulnerable high, especially against the backdrop of renewed strength in oil prices.

 

Risk warning and disclaimerThe market carries risks, and investment requires caution. This article does not constitute personal investment advice and has not taken into account the unique investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investment based on this article is at your own risk. ```