Strategists at Goldman Sachs estimate that U.S. households will sell off $750 billion in stock in 2023, due to rising bond yields and reduced savings, according to an article in Bloomberg. Instead, those households will give more allocation to credit and money-market assets, the strategists believe.
Though American households have been one of the biggest segments of buyers in stocks over the last 15 years—making up 38% of the U.S. equity market—that trend began to slow down once the Fed started implementing their tightening policies. Even if bond yields continue to go down after their recent decline, “households would still be net sellers of stocks,” Cormac Connors, who led the Goldman Sachs team, wrote in a note. So far this year, $51 billion has been drained from equity mutual funds and ETFs, according to Goldman data that is cited in the article.
The strategists analyzed equity demand by examining the 10-year Treasury yield and personal savings to determine their estimate for stock sales by U.S. households, noting that if lower yields persist, sales could be as little as $400 billion. But in a more bearish situation, that sales estimate could go as high as $1.1 trillion, the article reports. Meanwhile, the Goldman Sachs team expects foreign investors to be net buyers of stocks worth $550 billion and corporations worth $350 billion, while pension funds will snap up $200 billion.