(Boursier.com) — Stagflation in sight? Investors expect inflation to finally start to ease next year, but aren’t convinced that will coincide with Federal Reserve rate cuts, according to Bank of America’s latest survey of investors. fund managers. A record 85% of respondents see global inflation falling over the next 12 months, according to the survey of 272 fund managers with $790 billion in assets under management. But, 92% are banking on a “stagflation” scenario, in which growth continues to slow while inflation remains above average – a view which is now “mostly” shared by consensus, according to the strategist of the bank, Michael Hartnett.
The survey, which was conducted Nov. 4-10, before the latest U.S. inflation data was released, also shows that a majority of investors expect the Fed to stop raising rates only when the price index pegged to personal consumption expenditure – the Central Bank’s preferred measure of inflation (the famous PCE) – falls below 4%. The gauge’s latest reading for September was 5.1%.
With sentiment still ‘ultra-bearish’ and investor recession expectations at highest since April 2020, BoA strategist recommends selling S&P 500 above 4,100 points, or around 4% higher than current levels. At the sector level, investors had not been so ‘underweight’ technology since August 2006, while they remained ‘overweight’ energy for an 18th consecutive month.
On the bond front, managers anticipate lower yields over the next 12 months, a first in the survey’s history.
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