Goldman Sachs trader says S&P 500 no longer clears risk prices
Summary
Goldman's top derivatives trader, Brian Garrett, has stated that the S&P 500 has ceased to function as the primary clearing price for market risk. In his latest Weekend Prep note, he observed that market correlations across various asset classes, including rates, oil, and credit, have broken down relative to the S&P, which now appears to be correlated predominantly with itself. This shift indicates a significant change in how market risks are being priced, as the S&P is no longer able to serve as an effective benchmark for diverse risks.
Tokens
$SPX
Analysis
Goldman: Goldman Sachs is a global investment bank providing services in derivatives trading, securities, and risk management. Its top derivatives trader, Brian Garrett, recently issued analysis noting that the S&P 500 has ceased functioning as the traditional clearing price for broader market risks. S&P 500: The S&P 500 is a benchmark US equity index reflecting large-cap stock performance. In the reported analysis, it is described as increasingly behaving in isolation, with correlations to other risk factors having broken down. Brian Garrett: Brian Garrett serves as a leading derivatives trader at Goldman Sachs. He authored the Weekend Prep note explaining how the S&P 500 spot market now correlates primarily with itself rather than other asset classes. Risk Benchmarking: The S&P 500 is no longer serving as the primary mechanism for pricing diverse risks in the market. Market Correlations: Correlations across asset classes such as rates, oil, credit, and the consumer have broken down relative to the S&P 500.
Categories
macro