According to the latest Bank of America Corp. monthly fund manager survey, cash allocations rose to a net 27% overweight, the highest since July 2020, while institutional traders are hedging in the stock-derivatives market. And with corporate earnings beating expectations, there are good reasons for credit and equity rallies in America and Europe.
At the same time while policy makers have been slow to turn off the liquidity hose, they’re at least making a start, said Rieder.
“Could they do it a bit faster? Yeah I think so,” he said. “But at least the door is open and we’re moving in the right direction.”
Kristina Hooper is among those downplaying a market rout scenario from any moderation in growth and tighter monetary policy, though she sees a cap in the rally for risky stocks like cyclicals and small caps.
“We are in a transition to a more normal economy,” Invesco’s chief global market strategist told Bloomberg Radio. “That, to me, is the theme for 2022. And that suggests that we’re going to see growth moderate, and defensive and large-caps perform better.”
--With assistance from Jonathan Ferro and Nathan Hager.
This article was provided by Bloomberg News.