Wednesday, December 16, 2015

BofAML: Majority of Fund Managers Expect 3+ U.S. Rate Hikes in Next 12 Months

From FINalternatives:
Nearly sixty percent of global institutional investors believe the U.S. Federal Reserve will hike interest rates three or more times over the next twelve months, according to the latest Bank of America Merrill Lynch Fund Manager Survey.

Key findings include:
  • More than half of the panel (53 percent) says long U.S. dollar is the “most crowded trade,” up from 32 percent in November.
  • Thirty-five percent say the end of the Fed hiking cycle is the event most likely to end the U.S. dollar bull market.
  • Risk-taking fell ahead of the Fed’s meeting this week. Cash rose to 5.2 percent of portfolios from 4.9 percent last month.
  • A net 43 percent of regional fund managers expect China’s economy to weaken in 2016, up from a net 4 percent last month.
  • Weighted average GDP growth projections for China in 2018 have fallen to 5.5 percent from November’s 5.9 percent.
  • A net 29 percent of asset allocators are underweight commodities, up from a net 23 percent in November.
  • As investors increase U.S. equities underweights, Europe and Japan are most favored regions for overweights in 2016.
  • Investors emphasized a focus on quality, with a net 65 percent saying that high-quality earnings stocks will outperform low-quality earnings stocks in 2016.
“The strong dollar view is writ large across all asset, regional and sector allocations,” said BofAML Global Research chief investment strategist Michael Hartnett in a statement....