Wells Fargo head global markets strategist Paul Christopher argues inflation will cause people to \u2018dip into their savings\u2019 and \u2018buy fewer goods.\u2019<\/p>\n
Big money investors are growing less worried over inflation, according to a survey conducted by Bank of America.<\/p>\n
Money managers<\/strong> are "convinced inflation [is] transitory," wrote Michael Hartnett, chief investment strategist at Bank of America. <\/p>\n Sixty-one percent of respondents to Bank of America’s Fund Manager Survey in November said inflation was "transitory," representing a three percentage point increase from September. Thirty-five percent of those surveyed said inflation is "permanent."<\/p>\n INFLATION MAY PAVE WAY TO RECESSION: PETER SCHIFF<\/strong><\/p>\n This while a net 14% said inflation will fall to the lowest level since March 2020. <\/p>\n The drop in inflation expectations comes as investors raise their expectations for Federal Reserve rate hikes next year. Thirty-nine percent of respondents expect two rate hikes in 2022, up from 24% in October. Seventy-six percent believe at least one rate hike will occur next year. <\/p>\n As rate hike expectations increase and investors grow more optimistic that inflation is transitory, expectations for a steepening yield curve decline. A net 9% of investors said the yield curve will steepen, the lowest since February 2019. <\/p>\n Fewer worries over inflation provoked investors to deploy cash sitting on the sidelines into U.S. stocks, which investors are now a net 29% overweight, the most since August 2013. Investors raised their allocations to consumer discretionary and technology while reducing holdings in inflation assets like energy and banks. <\/p>\n Respondents were most bearish on bonds with a net overweight of -69%. <\/p>\n Inflation (33%) and central bank rate hikes (22%) were seen as the biggest "tail risks." Long tech (37%) was considered the "most crowded trade," edging out long bitcoin (21%). Most investors expect bitcoin’s price to remain between $50,000 and $75,000 over the next 12 months. <\/p>\n