That’s the takeaway from the latest Markets Live Pulse survey, which showed that roughly two-thirds of the 410 respondents anticipate a downturn in the world’s biggest economy by the end of next year. A minority of 20 percent of pollees even sees a slump in 2023, at a time when the Federal Reserve’s own staff have ditched their recession forecast altogether.
The poll results are consistent with pricing in Fed funds futures, which show traders expect the central bank to cut interest rates multiple times in 2024, by more than one percentage point in aggregate, ostensibly in response to eventual economic weakness. Investors are likely betting that the Fed will pivot to rate cuts in 2024, making long-maturity debt attractive despite the more than 1 1/4 percentage points of yield pick-up currently available on short-dated bills. Almost 60 percent of Pulse participants say now is a good time to buy Treasury securities with maturities longer than seven years. Of note, 59 percent of the responses came in before the Fitch downgrade on August 1.
The biggest chunk of Pulse survey respondents, 47 percent, say the US stock market is a bubble powered by irrational exuberance, and a quarter view it as being in a bear market rally. Meanwhile, 28 percent say it’s a bull market that has more room to run.Driving home the preponderance of bearish views the survey elicited, more than two-thirds of respondents say the S&P 500 is still mired in an earnings recession that has longer to run.