Swap prices show that the Fed is expected to push policy toward a peak of 5% by the middle of next year, then decline to around 4.5% by the end of 2023. Back in September, Fed officials indicated a peak of 4.6% for the rate, though Chair Jerome Powell subsequently said that should be revised higher at the December meeting.
Almost two-thirds of investors surveyed backed the scenario of a mild US recession next year.
They’re “thinking about the state of the economy right now, that it’s not terrible and just forecasting that the rate increases are going to mildly affect the economy,” said Bokeh’s Forrest. “That’s a bad assertion but I understand. We don’t know that we’re really going to go into a recession, first of all, and we don’t really know that it’s going to be soft. I think this is a lot of wishful thinking.”
The most popular strategy call for 2023 among all respondents was Citigroup’s view that the US dollar will stay strong in the near term and then depreciate during the second half of the year. This jibes with the view of an overwhelming majority of both retail and professional respondents who expected that if the Fed stops hiking at mid-year and pauses, it will then cut rates.
Survey participants were also asked which investor has the best tweets. At the top of the list was Michael Burry, the hedge-fund manager who gained fame by betting against the housing market ahead of the 2008 crash (and who is also famous for deleting both his tweets and his Twitter account). Cathie Wood, whose flagship Ark Innovation ETF has slumped more than 60% this year, ranked lowest among the survey options.
--With assistance from Airielle Lowe and Tomoko Yamazaki.
This article was provided by Bloomberg News.