(Boursier.com) – New message of caution, this time from Bank of America. The bank’s teams recall that risky assets started 2023 with deep optimism, with traders pinning their faith in the continuation of the famous ‘Goldilocks’ with a smooth pivot from the Fed (both historically unlikely). Indeed, markets are pricing in a CPI of 2.3% by June, the fastest decline in inflation in a developed market in 40 years, and 200 basis points of Fed rate cuts. by Dec 24 (the most dovish expectations of any prior bull cycle). In addition to these unprecedented forecasts, the risks that have dominated trading in 2022 still appear to represent major obstacles to a sustainable bull market, namely: economic uncertainty, the approach of a recession and a hawkish Fed that actively wants prevent financial conditions from easing. Therefore, BoA specialists recommend taking advantage of the strong ambient optimism to strengthen its hedges.
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