BofA is bearish on markets, sees impact on rates in 2022

U.S.A.BofA is bearish on markets, sees impact on rates...

(Bloomberg) — Strategists at Bank of America Corp. are turning bearish on the market outlook for next year, urging investors to focus on holding cash as bullish inflation and higher interest rates continue to weigh on global markets. change the trajectory of asset prices.

In a note to clients, strategists led by Michael Hartnett provided macro trading recommendations, including volatility indicators, long positions in oil, energy, the US dollar and real assets. He wrote that after the “inflation shock” of 2021 and the “growth shock” of 2020, investors can expect a “rate shock” in 2022.

“Therefore, we are in a recession and we believe capital maintenance will increase as a theme next year,” the banking strategists said.

His forecast is similar to that of other Wall Street banks, such as Goldman Sachs Group Inc. And JPMorgan contrasts with the bullish views of Chase & Co, which anticipate equity markets will move at a more moderate pace next year.

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Risk assets rose on Monday, sending the S&P 500 to a new all-time high after investors applauded Jerome Powell’s nomination for a second term as Federal Reserve chief.

Bank of America strategists cautioned that this is “a very unconventional cycle” and their wording “will follow a conventional path” is highly unlikely. They draw parallels between the current investment context and the “early stalemate” of the late 1960s and early 1970s.

As for the bullish argument for stocks, asset prices could continue to rise if the Fed is determined to keep real rates deeply negative, he wrote.

Original Note:

BofA is bearish in the market and ‘rates shock’ to come in 2022

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