Investors continued piling into stocks and bonds, dismissing the risk of a more aggressive Federal Reserve as they expect it to ease the pace of rate hikes while inflation pulls back from its peak, according to Bank of America Corp. strategists.
“Very few fear Fed” as more traders expect a policy pivot and as the meme-stock frenzy returns, Hartnett said. Still, “whether Fed knows or not, they’re nowhere near done,” with inflation expected to be in the 5 per cent to 6 per cent range by spring, still well above the central bank’s target. Bank of America’s own bull-and-bear indicator remains at the zero mark, or “maximum bearish” level, for a tenth week in a row, which is often seen as a contrarian signal to buy. Still “it is likely to rise in coming weeks” given inflows to high-yield bonds and less bearish fund manager views, the strategists wrote.
Bank of America’s Hartnett said “we are near top of equity trading range” and stocks have yet to reach a bottom.