BofA’s latest survey signals a worrying trend as 76% believe the hiking cycle is over, 80% expect lower short rates, and a record 61% foresee lower yields. Investors are shifting to bonds at the highest rate since 2009. Notably, the big change isn’t just the macro outlook, but the widespread expectation of lower inflation and yields in 2024. UBS predicts a substantial 275 basis points interest rate cut by the Federal Reserve next year, quadrupling the market’s current expectations. These indicators collectively point to a growing unease among investors, signaling concerns about economic trajectory, heightened financial uncertainty, and a move toward more defensive positions.
The stakes heighten significantly if these projections prove incorrect. A miscalculation in the consensus and investor expectations could trigger unforeseen disruptions in interest rates, inflation, and overall market dynamics. Investors, unprepared for a deviation from the anticipated trajectory, might face an urgent and volatile landscape, marked by financial instability and heightened challenges in navigating the markets.
Meanwhile:
The consensus among fund managers overwhelmingly expects that long-term yields will be lower 12 months from now. pic.twitter.com/wTUdLzPKcG
— Otavio (Tavi) Costa (@TaviCosta) November 14, 2023
What IF consensus is terribly wrong? 👀 https://t.co/Z6O35C4n2C
— The Macro Guy (@SagarSinghSetia) November 14, 2023
BofA Fund Manager Survey
-76% say hiking cycle is over
-80% expect lower short rates
-Record 61% expect lower yields
-Just 6% see higher CPI in 2024 pic.twitter.com/bCC0IDYIff— Jonathan Ferro (@FerroTV) November 14, 2023
BofA’s latest fund manger survey showed investors were dumping cash to hold the biggest overweight position in bonds since 2009. The “big change” was not the macro outlook, but expectations that inflation and yields will move lower in 2024. https://t.co/jcuIID6B2c pic.twitter.com/xuzowLwZIl
— Lisa Abramowicz (@lisaabramowicz1) November 14, 2023
I don't even know what to say anymore … 😂🤡🌎
There are a lot of signs pointing to recession in 2024.
I guess we will have to wait and see.
What do you think? pic.twitter.com/QjQD5TaEmf— Wall Street Silver (@WallStreetSilv) November 14, 2023
UBS predicts the Federal Reserve will cut interest rates by 275 bps next year, almost 4x what the market is currently expecting pic.twitter.com/Q5ivq66QkR
— Barchart (@Barchart) November 14, 2023
Hedge Funds now have the largest short positions in Oil since July pic.twitter.com/CxK4AF9iuo
— Barchart (@Barchart) November 14, 2023
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