1/4
The BofA Fund Mgt Survey shows 55% say inflation is transitory, down from 61% in Nov.
A CNBC survey, also out yesterday, shows consistent results. 59% say inflation as transitory, down from 64% at the beginning of November.
Transitory is STILL the consensus!
The BofA Fund Mgt Survey shows 55% say inflation is transitory, down from 61% in Nov.
A CNBC survey, also out yesterday, shows consistent results. 59% say inflation as transitory, down from 64% at the beginning of November.
Transitory is STILL the consensus!
2/4
Since the majority of the BofA survey sees inflation as transitory, it should come as little surprise that 78% think the Fed will hike two or fewer times in 2022.
The CNBC survey expects the funds rate to be 0.72% year-end 2022. This rounds up to three rate hikes next year.
Since the majority of the BofA survey sees inflation as transitory, it should come as little surprise that 78% think the Fed will hike two or fewer times in 2022.
The CNBC survey expects the funds rate to be 0.72% year-end 2022. This rounds up to three rate hikes next year.
3/4
As the table shows, the market is pricing in three rate hikes next year and a 38% chance of a fourth rate hike in February 2023.
In other words, the market is pricing in roughly 3.4 hikes in the next 14 months, more aggressive than the results of the surveys above.
As the table shows, the market is pricing in three rate hikes next year and a 38% chance of a fourth rate hike in February 2023.
In other words, the market is pricing in roughly 3.4 hikes in the next 14 months, more aggressive than the results of the surveys above.
4/4
Add it up and we see a disconnect between what managers think and what the market is pricing.
Managers simply do not believe the Fed will risk breaking the economy or markets by being as aggressive as the markets are pricing.
Will the Fed reconcile these positions today?
Add it up and we see a disconnect between what managers think and what the market is pricing.
Managers simply do not believe the Fed will risk breaking the economy or markets by being as aggressive as the markets are pricing.
Will the Fed reconcile these positions today?
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