In the last data of October, the Consumer Price Index (CPI) marked an annual 7.7%continuing a downward trend from the June peak of 9.1%, which was a record in the last forty years.
As a result, since its disclosure last week the market began to bet that the Federal Reserve (FED) will slow down its interest rate hikeswhich the increased six times so far this year.
However, in the corner of Wall Street investment funds the thinking is not the same: from the bottom BlackRockfor instance, they do not see possibilities of a “soft landing” neither in the United States nor in Europethat is, to achieve a lower inflation without negatively impacting activity.
The survey carried out by the Bank of America and published by the Bloomberg agency indicates that the funds maintain this position, even despite the recent publication of positive employment and consumption data in the United States that indicate that the Fed could end up succeeding in achieving said “soft landing”. “.
According to the surveyfunds will continue to be defensive with bonds and stocks publicly traded, until they see more conclusive evidence that there really is a positive outlook for the economy.
“We believe that the central banks are going to overreach and push economies into a mild recessionand then stop raising rates when the damage becomes apparentwithout having done enough to bring inflation down to its targets,” analyzed wei liHead of Investment Strategy at BlackRock.
According to Li, The United States will suffer a slowdown in its growth, lower profits and elevated price pressureswhich justifies, according to his view, the fund’s smallest portfolios in assets and bonds from developed markets.
The BoA’s own survey specified that investment funds maintain historically low levels of asset position –in the technology sector it is the lowest since 2006- and high in money.
Meanwhile, for the moment and despite the enthusiasm generated by the latest inflation data, the Fed rules out making a change in its policy.
During the week the president of the FED of the city of San Luis, James Bullard, considered that the interest rate should rise, at least, to a range between 5% to 5.25% to combat inflation, compared to the current 3.75% to 4%.
Similarly, its San Francisco counterpartMary Daleystated that a pause in rate hikes was “out of the question”and the president of the Kansas City affiliate acknowledged that it is increasingly difficult for the Fed to work with inflation without causing a recession.
“We classify the current context as stagflationary,” he stressed Alex Saunders, of Citibank, who He recommended selling US asset titles and buying commodities and bonds.
investcoanother investment firm, joined the same line as BlackRock, betting on treasury bonds.
“A sign to be more ‘risky’ would be for the Fed to move closer to a pause in rate hikes,” he said. kristina hooperglobal markets strategist at Invesco.
Source: Ambito
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